ONTARIO TRIAL LAWYERS' ASSOCIATION
DOMINION OF CANADA GENERAL INSURANCE CO
ONTARIO BRAIN INJURY ASSOCIATION
CO-OPERATORS GENERAL INSURANCE CO
CANADIAN AUTOMOBILE ASSOCIATION ONTARIO
CONSUMERS' ASSOCIATION OF CANADA (ONTARIO)
CANADIAN PARAPLEGIC ASSOCIATION ONTARIO
COUNTY OF YORK LAW ASSOCIATION
PEOPLE AGAINST THE INSURANCE NIGHTMARE
UNDERWRITERS FRAUD CONTROL INC
CANADIAN BAR ASSOCIATION -- ONTARIO
ASSOCIATION OF CANADIAN INSURERS
HEAD INJURY ASSOCIATION OF TORONTO
REGULATED HEALTH PROFESSIONALS COALITION ON AUTO INSURANCE
CONTENTS
Wednesday 21 February 1996
Auto insurance
Zurich Canada
Judy Maddocks, president, personal insurance
Jim Christie, partner, Ernst and Young
Ontario Trial Lawyers' Association
Dermot Nolan, president
John McLeish, past president
Dominion of Canada General Insurance Co
George Cooke, president and CEO
Ontario Brain Injury Association
Richard Guinan, executive director
Barbara Baptista, chair
Robert Gates, member
Co-operators General Insurance Co
Terry Squire, president and CEO
Karen Lock, vice-president, claims
Andrew Cartmell, vice-president, personal lines
Canadian Back Institute
Tony Melles, executive director
Paulette McGill, program manager
Canadian Automobile Association Ontario
Catherine Newell, vice-chair, government and public relations committee
Consumers' Association of Canada (Ontario)
Helen Anderson, chair, insurance committee
Canadian Paraplegic Association Ontario
Michelle Meehan, director, rehabilitation services
County of York Law Association
Michael Shannon, member, board of trustees
Marvin Blaha
People Against the Insurance Nightmare
Renee Levesque, rehabilitation consultant
William Morris, member
Kenneth Burgess, member
Underwriters Fraud Control Inc
Linden Rees, partner
George Milnes, partner
Canadian Bar Association--Ontario
Douglas Los, president
Tom Andrews, chair, auto insurance committee
Gina Brannan, chair, insurance law section
Association of Canadian Insurers
Bob Purcell, claims manager, Canada, Economical Insurance Group
Head Injury Association of Toronto
Ruth Crawford, executive director
Walker, Fox and Schwarz
Jason Schwarz, barrister
Regulated Health Professionals Coalition on Auto Insurance
Bob Haig, chiropractor
Moira Sonnenberg, occupational therapist
Karen Lee, physiotherapist
Abdul Bapoo
Fabio Leone
Tom David
Barry Brown
STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS
Chair / Président: Chudleigh, Ted (Halton North / -Nord PC)
Vice-Chair / Vice-Président: Hudak, Tim (Niagara South / -Sud PC)
*Arnott, Ted (Wellington PC)
*Brown, Jim (Scarborough West / -Ouest PC)
*Castrilli, Annamarie (Downsview L)
*Chudleigh, Ted (Halton North / -Nord PC)
*Ford, Douglas B. (Etobicoke-Humber PC)
*Hudak, Tim (Niagara South / -Sud PC)
*Kwinter, Monte (Wilson Heights L)
*Lankin, Frances (Beaches-Woodbine ND)
Martiniuk, Gerry (Cambridge PC)
Phillips, Gerry (Scarborough-Agincourt L)
*Sampson, Rob (Mississauga West / -Ouest PC)
Silipo, Tony (Dovercourt ND)
*Spina, Joseph (Brampton North / -Nord PC)
*Wettlaufer, Wayne (Kitchener PC)
*In attendance / présents
Substitutions present / Membres remplaçants présents:
Crozier, Bruce (Essex South / -Sud L) for Mr Phillips
Kormos, Peter (Welland-Thorold ND) for Mr Silipo
Marland, Margaret (Mississauga South / -Sud PC) for Mr Martiniuk
Clerk / Greffier: Franco Carrozza
Staff / Personnel: Andrew McNaught, research officer, Legislative Research Service
The committee met at 0924 in room 151.
AUTO INSURANCE
ZURICH CANADA
The Chair (Mr Ted Chudleigh): We will commence with the first presenter, Zurich Canada. Judy Maddocks and Jim Christie, welcome to the standing committee on finance and economic affairs this morning. Your brief has been distributed. Do you wish to read the brief or make comments to it?
Ms Judy Maddocks: I will read the brief, if that's all right with you.
The Chair: Then we will proceed to questions, if there's any time remaining. We have 20 minutes.
Ms Maddocks: Mr Chairman, committee members, good morning. With me today is Jim Christie, an actuary and partner with Ernst and Young. I want to thank the members of the committee for taking the time to hear our perspectives on auto insurance reform. Since this will be the fourth system in less than a decade, I know you will thoroughly study all the issues at hand to ensure that you do not have to reconvene on this topic again in a few years.
Zurich Canada employs over 1,200 people in Ontario, generating over $60 million in salaries and benefits for the Ontario economy. With more than 300,000 auto policies in force and over $400 million in premium, we are the second-largest writer of auto insurance in the province.
When customers get angry about skyrocketing premiums, brokers and insurers are on the front lines. Ultimately, governments are not immune from the anger of consumers. Zurich Canada wishes to be part of a solution that lasts for Ontario. These hearings are our opportunity and obligation to articulate on behalf of Zurich Canada's customers how imperative it is for the next automobile insurance product to provide sustainable, stable rates.
The reality of auto insurance is that we need to satisfy the six million drivers in this province, regardless of whether or not they have a claim. First and foremost, we must build a product that delivers price stability over a long period of time. Zurich Canada applauds the government's intent to rein in the escalating costs resulting from Bill 164. However, the proposed plan before this committee will not meet the government's objective of providing rate stability. In Zurich Canada's view, rate increases of between 35% and 40% over the next five years will not meet our customers' expectations.
The actuarial report on the draft legislation by Ron Miller of Exactor Insurance Services predicts an annual premium increase of 7% to 8%. However, Zurich Canada believes the report underestimates the impact of broad tort access on rate stability. If any of the study's several assumptions are wrong, or if any of the several caveats in the costing comes to pass, then we will not be anywhere close to the predictions of 7% or 8%. Even that rate of increase does not meet customer expectations. Substantially higher premiums will certainly exceed public tolerance.
We have prepared two charts which have been distributed with our written submission. The first is a costing of the government's proposal by breaking down the major components. The second chart is an illustration of automobile insurance costs. It compares the government plan with some proposals that Zurich Canada will put forth later in this presentation. It also runs through the history of the various products we've had in place in Ontario over the last decade.
Referring now to chart 1, you will see the components that comprise insurance industry costs and affect rate stability. The chart is a useful tool because it highlights the balance between tort access and accident benefits. You will see that before 1989, Ontario was in a high tort environment. In the two years prior to the introduction of no-fault benefits, premiums increased by more than 33%. The major cost component pushing up the rates was bodily injury tort.
From 1990 to 1993, the cost of accident benefits was the significant cost component. Tort access was restricted and rates were relatively stable. Unfortunately, the auto insurance legislation of the day did not contain enough controls on accident benefits and, after a brief period of relief, rates began to rise again. During the two years we have been under Bill 164, accident benefit costs have reached new peaks. If we continue under this regime, premiums will increase by 85% over the next five years. This is simply not acceptable.
Under the proposed plan, accident benefits are cut but tort access is once again broadly reinstated. The government plan does not reduce accident benefits to the level they were at before 1989, yet it expands the access to tort over Bill 164. How can rates be expected to increase at a sustainable, stable price when both of the main cost components and drivers of price are at high levels?
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To many of the members of this committee and to other industry representatives, these arguments no doubt seem familiar. We've been going over them for more than 15 years.
To determine the balance between the cost components of tort access and accident benefits, we must weigh the richness of the benefits against what the public will be willing to pay. We know the public has an intolerance for rates that grow exponentially, so we must all govern ourselves to make sure that premiums do not go past that point of intolerance.
Zurich Canada is not fundamentally opposed to the right to sue. Our position is that a severely injured not-at-fault accident victim should have recourse through the courts. However, the proposed legislation introduces tort access that is far too broad. It will undermine the industry's ability to provide fair and competitively priced products.
I'd like to draw your attention to the experience of other jurisdictions with broad tort access. Tort insurance programs in other jurisdictions have been found by numerous analyses to be relatively inefficient in delivering benefits to accident victims. In virtually every jurisdiction in North America where consumer anger has driven product reform, the catalyst has been the escalating costs of premiums. Ontario must be the only jurisdiction in North America that is moving towards broader tort access.
On January 1, 1995, Saskatchewan Government Insurance found that it could no longer increase rates to compensate for costs related to tort; bodily injury costs shot up over 40% between 1993 and 1994. At the beginning of 1995, Saskatchewan moved its auto insurance system away from tort access towards no-fault benefits.
Previously, on March 1, 1994, the Manitoba provincial insurance company also shifted the balance towards no-fault benefits. It found costs had to be controlled.
In comparison, the province of Alberta, with a broad tort environment, has seen astronomical rate increases. From 1990 to 1994 premiums have soared 62%, with no end in sight.
Even California, one of the most litigious jurisdictions in North America, is shifting the balance away from broad tort access. Proposition 200 has been put forward in reaction to huge rate increases. If passed this spring, the proposal will eliminate litigation from California's auto insurance system.
It has been stated elsewhere that the closer an auto insurance system is to a tort environment, fewer benefits pass through the system to the claimant than in a system with a higher quotient of no-fault benefits. In 1987, before no-fault benefits were introduced in Ontario, insurers spent $300 million on legal fees while claimants spent $400 million. Think of it: 41 cents out of every dollar spent in connection with bodily injury claims went to legal fees instead of to claimants, or otherwise to keep rates stable and premiums low. Not only that; the total $700 million equalled almost a quarter of the direct cost of all auto insurance.
The government's plan also deflects OHIP costs for treating car accident victims back to auto insurance customers. The insurance industry has asked for, and received in the past, exemption from this levy. While OHIP subrogation does not contribute to rate instability over time, it does add 2% to 5% to the premium in year one and ongoing of the new plan. Mr Miller's study does not account for this factor. All cost projections of the product under the proposed plan should factor in this ongoing cost.
As I stated earlier, Zurich Canada wishes to be part of a solution that lasts for Ontario. Zurich Canada believes that the consumers' tolerance for year-over-year increases does not extend too much beyond 5%. In fact, customers whom I talk to, who are not related to the insurance business, say, "That is far too high." They want to see something closer to CPI. The IBC's costing of the government plan allows for an annual increase of 7% to 8%, without the inclusion of OHIP and contingency. If we accept the IBC's figure as a starting point, then we must drive at least three points of premium increase out of the government plan.
Zurich Canada respectfully requests that you consider the following suggestions when amending the government plan. They will assist your effort to bring rate stability back to Ontario's automobile insurance system.
Firstly, introduce the words "permanent" and "physical" to the non-economic verbal threshold and index the non-economic deductible to the consumer price index.
Secondly, apply the same threshold to both economic and non-economic losses.
Thirdly, exclude the use of contingency fees for auto insurance litigation.
Zurich Canada has costed out these proposals and determined their positive impact on premium price stability. If you refer to the charts in the appendices of our written submission to this committee, you will see the effect of these suggestions on the price of premiums and rate stability.
Adding the words "permanent" and "physical" to the verbal threshold addresses the significant contribution that bodily injury tort makes to premium price. Indexing deductibles maintains their significance and relevance as time passes. These stipulations would decrease total bodily injury costs by one half of 1%. Applying the same threshold to both economic and non-economic losses would realize an additional drop in bodily injury costs by 3.25%.
I am referring now to chart 2 in the handout. We believe the net result of our proposals will narrow the gap between the IBC's projected rate increases and what the public is willing to pay by two points.
Contingency fees may soon be coming to Ontario's legal system. Mr Miller's report has not factored in the cost of contingency fees, or the impact they would have on rate stability. The number of claims that end up in court would, could, increase dramatically. Informal studies of other Canadian jurisdictions indicate that contingency fees may add anywhere from 2% to as much as 7% to loss costs. Using Mr Miller's figures, the additional cost accompanying contingency fees would bring the annual rate increases under the proposed plan into the double-digit range seen under Bill 164.
Price stability is a product of cost predictability. Contingency fees are an unknown variable and will contribute to price instability. The draft legislation should stipulate that contingency fees not apply to auto insurance litigation.
There is a need to reduce the annual rate increase by at least one more point. Clearly, there must be another area from which these cost savings can come.
We have not had an opportunity in the short time available to consider cost containment initiatives pertaining to accident benefits in any great detail. However, with medical and rehabilitation costs expected to increase by 15% under the proposed product, some considerable action must be taken.
Some of the preliminary areas of concern for Zurich Canada were covered by the IBC earlier this week -- the treatment plan initiative, for example. We would also like to see the strengthening and exploring of the gatekeeper aspect of the system to ensure the maximum amount of resources go to injured claimants, not other parties. The impact of fee schedules on medical and rehabilitation costs should be explored.
There is little doubt among the government, insurers and Ontario's six million drivers that there must be changes to the current auto insurance system. Present and imminent rate increases reflect that reality. However, in our haste to move away from the current system we should not fail to examine very critically the proposals placed in front of us.
Rate instability is usually the catalyst that prompts an auto insurance review. The variable cost components of the auto insurance product are bodily injury tort claims and accident benefits. If the costs associated with either tort access or accident benefits grow too rapidly, the result will be increased prices.
Zurich Canada does not pretend to have all the answers to this complex problem. However, we do believe that the government plan tilts the balance between these cost components too far into a tort environment. We also believe that the three proposals we have put forward today will help the government improve rate stability and reduce the trend of rate increases within the guidelines of its proposed plan.
Zurich Canada wants to assist the government is providing an automobile insurance system that will help the insurance industry meet the needs and demands of the public: reasonable benefits at a reasonable cost, once and for all.
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Mr Monte Kwinter (Wilson Heights): Thank you very much for your presentation. In your projections, where you show the potential increase as it's proposed by the IBC, and the savings that you would have with applying the threshold to all tort and prohibiting contingency fees, could you tell me if you take into account the shared costs on health care that would be added back into the premium.
Ms Maddocks: The OHIP transfer? Is that what you're talking about?
Mr Kwinter: Whatever the amount is, yes.
Mr Jim Christie: No, we have not. We anticipated that OHIP costs would be borne by the insurance industry, and if they were not, our costs would be lower in each of the years.
Mr Kwinter: The point I'm making is that in your calculations, if it was borne by the insurance industry, that would reflect in the premiums.
Mr Christie: Yes.
Mr Kwinter: Is that calculated in?
Mr Christie: These graphs do include the insurance industry paying for OHIP.
Ms Frances Lankin (Beaches-Woodbine): Judy, in terms of these numbers, what I'm trying to understand is, if you add in 2% to 5% for OHIP, if you add in 2% to 7% for the contingency fees, if you assess the transition costs and whether they were adequately reflected in Mr Miller's costings or not, if you add in your own assumptions on the caveats, it's not 40% we're likely to see. Is it 50%, is it 55%, is it 60%? What does it add up to?
Ms Maddocks: I would say the range is considerably more than 40%. Also, to add to the uncertainty around what you're talking about, some of the assumptions and caveats -- I don't know if you've had an opportunity to go through -- indicate that if those assumptions are flawed in any way, there could be substantially higher trends than are indicated. I would hazard a guess that you're looking at a minimum four points above what the IBC is perhaps predicting. So year one, you're maybe into 11%, 12% at a minimum. It could be much higher than that.
Mr Peter Kormos (Welland-Thorold): Howdy, Ms Maddocks, again.
Ms Maddocks: Nice to see you again, Mr Kormos.
Mr Kormos: Not good to see you. It's been a long time, many years. The industry doesn't appear to be ad idem on this one. They're all over the place. Zurich is a member of the Insurance Bureau of Canada. How is it that at this juncture point, there is such incredible disagreement within the industry as to what's an appropriate response to the phenomenon of premium increases? Who's right and who's wrong? If you're right and they're wrong, is everybody out of step but for Zurich? What's going on here? Is this a conspiracy again?
Ms Maddocks: Another conspiracy. The reality is that Zurich has made its position, which is somewhat counter to the association's position, known to the industry association over the last year. We've tried to work with them to consolidate our thinking into their planning. So it's fair to say no, there is a real division in terms of our view of where this product should go versus theirs.
Mr Kormos: Do you agree with --
The Chair: Thank you very much, Mr Kormos. I'm afraid you've had your one question. We'll move to the government side.
Mr Rob Sampson (Mississauga West): Back in August, we met and you presented me with Zurich's idea, and I want to thank you for doing that, as a number of other people did. That particular presentation was not too dissimilar from the suggestions you're making now to significantly redesign some of the tort components we have in this proposal. But in August, the trend line you had in your plan was 30% over five years. I'm trying to understand how it is we can get hold of that 30% number, because it doesn't matter how you shake it, that's not an acceptable number. The IBC has said, "Ours is 35% over five years." What I saw from you in August was 30% over five years with significant tort control.
Ms Maddocks: True.
Mr Sampson: Where are we missing the boat here on the control of costs?
Ms Maddocks: Obviously, there are two areas. If you wanted to really, really get into the guts of costs, you could do what Quebec's done and go to totally a pure no-fault system. We're not advocating that, because there is an assumption that severely injured people still want to have recourse through the courts. Clearly that's one area where you could tighten it even more on the tort side.
On the accident benefits side, you're quite correct: The underlying trends indicate that even with the modifications this proposal makes to the medical and rehab side, the underlying trend factor, albeit changing from 30% per annum to 15% per annum, still is driving costs up. Our sense is that we really have not been effective in getting into the guts of that. It's been superficial in terms of trying to apply a $75,000 limit and those kinds of things. But I think there's more work to be done to actually get into the medical and rehab drivers.
Having said that, I think we have to balance very much the need to ensure that victims of accidents, whether they're at fault or not at fault, who are harmed, need to be compensated fairly and not impaired by the process. I think that balance has not been achieved by this plan and we need to strike that balance. I think there are still savings in that context.
The Chair: Thank you very much, Ms Maddocks. We appreciate the input Zurich Canada has had into our deliberations.
ONTARIO TRIAL LAWYERS' ASSOCIATION
The Chair: We now move to the Ontario Trial Lawyers' Association, Mr Nolan, president.
Mr Dermot Nolan: My name is Dermot Nolan. I'm the president of the Ontario Trial Lawyers' Association. My colleague John McLeish who is with me is the past-president of the association. I will make some introductory remarks and then John will follow with some analysis of the bill.
The Ontario Trial Lawyers' Association, OTLA, is an association of lawyers who represent victims of wrongdoing in civil lawsuits. We do not represent insurance companies or institutions. Not unlike yourselves, we are the people who represent the people. We are also, like yourselves, potential innocent accident victims, and we would like to think that you all share with us a common goal which is best expressed in the OTLA motto -- "Justice For All."
Unfortunately, it has not been our experience over the past seven years that those who have studied automobile insurance in this place have cared a whole lot about justice for all. Instead, they have gone from bad to worse in response to a phoney so-called insurance crisis. The result has been a tragedy of enormous proportions for the people you and we represent. It is a story of cowardice and avarice; it is a story of deception and oppression.
Our clients are ordinary people. Day after day they come to us looking for justice. And you know what? They know what justice is. They also know what common sense is. When someone has wronged them, they expect justice to prevail to relieve their suffering. They stare at us in disbelief when we tell them how their political leaders have stolen their right to justice because some insurance companies need to make more money. It offends their sense of fairness and it bedevils their common sense. Their pain grows deeper and it turns into hostility and anger.
Ordinary folks understand that from time immemorial, human nature looks to even the score when one person wrongs another, and if a fair and credible system of justice is not in place, the unbridled laws of nature take over. To avoid this and to civilize humankind, every legal system in human history has required the wrongdoer to fully make up to the person who has been wronged. The rule has always been the same: The innocent victim must be made whole.
Enter the modern insurance lobby. Enter cowardly legislators stampeded by fear and deceit. Exit the wisdom of the ages. Exit justice.
This government is the third successive government with an opportunity to demonstrate courage and fairness in dealing with automobile insurance. Its two predecessors have failed that test miserably.
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This government came to office trumpeting common sense. Regrettably, in this bill, we see a brand of common sense which includes much of the same old non-sense. It is a glimmer of light in the darkness, but unless this committee does the right thing, this bill can hardly be heralded as much more than a modification of misery, a fragile illusion. The innocent victims can hardly be blamed if they don't jump for joy merely because their death warrant has been commuted, only to be replaced by a life sentence with no chance for parole.
Let me be clear. There is not now nor has there ever been any justification whatever for restricting the historic, timeless and fundamental human right of innocent accident victims to full compensation for all of their losses which result from the wrongdoing of others. The fundamental right of victims of wrongdoing to seek justice from the perpetrator of their harm is not an insurance issue. There is no justification whatever for a $15,000 or a 15-cent deductible from an innocent victim's claim. There is no justification whatever for imposing a threshold of any kind on innocent victims and there is no justification whatever for restricting an innocent victim's right to full indemnity for 100% of gross economic loss.
These restrictions perpetrate the fundamental injustices of the Liberals' Bill 68 and the NDP's Bill 164. They mix up tort rights with insurance contracts. We urge you not to confuse the two as your predecessors have done.
Even if you feel, as legislators, that you must put limits on insurance coverages, you can do so without restricting in any way the tort right of innocent accident victims against the perpetrators of their harm. Even if you feel there must be a deductible, why not make the wrongdoer pay it? Why further victimize the innocent victim?
Think about it. If Conrad Black goes out and gets drunk one night, gets behind the wheel of his Rolls and runs you down on the sidewalk, why shouldn't you be able to recover all your losses from him? If you feel the law must restrict his insurer's obligation, restrict what his insurer can be made to pay, that's one thing, but there's no reason to limit your right to recover directly from him what his insurer doesn't have to pay. Why should you have to pay, for example, a $15,000 deductible? Why not make the wrongdoer pay that out of his own pocket or her own pocket? That doesn't affect the insurance picture at all.
We urge you to repair this critical damage to our ruptured system by leaving tort rights where they've resided for 35 centuries -- in the careful hands of our justice system. The basest criminal is granted unrestrained access to justice; the innocent victim deserves no less. Do not perpetrate again the chaos of the last six years by failing to distinguish between regulating insurance contracts and meddling with fundamental human rights. The innocent victim must be entitled to a full cup of justice, not one riddled with holes from a shotgun blast by a reckless Legislature.
Finally and most importantly -- and then I'll turn it over to my colleague -- we urge you to train your sights on the real culprit: road safety. Please do everything in your power to reduce these horrible accidents. Improve and enforce safety standards, the rules of the road and effective driver training. Encourage the research and development of bold and creative measures that will replace the automobile in the 21st century with transportation systems that are both effective and safe.
We have seen the carnage wrought by the automobile. We have touched the lives it has broken. It's time we all said enough and found another way.
We know that insurance or no insurance, threshold or no threshold, rights or no rights, the only satisfactory answer is no accidents. What is required now is an aggressive pursuit of an integrated strategy to reduce and eventually eliminate these accidents while providing a fair system to care for and compensate for their innocent victims.
I would now turn our time over to my colleague John McLeish who's the past president of OTLA. John has comments on specific items in the proposed bill. Thank you very much for your time.
Mr John McLeish: Good morning, members of the committee. I appreciate the opportunity of being able to address you this morning. I've looked at the legislation in detail. I am appreciative of the fact that the government has committed to clean up what has been described as no less than a shambles.
The Chair: Excuse me, if I might interrupt. We're not picking you up on Hansard. We will get a hand mike for you immediately, if not sooner. I apologize.
Mrs Marland: I'm wondering if we could move the overhead projector being more to the centre and then members down there can see it and you won't be in our view from this corner.
Mr Kormos: Are you advocating a move to the centre, Mrs Marland?
Mrs Marland: Yes, I am, Mr Kormos.
Ms Lankin: It's a great place to be, Margaret.
Mr Nolan: Mr Chairman, I do hope these technical difficulties won't interfere with our time allotment. That would be a terrible catastrophe.
The Chair: I was wrestling with that problem.
Mr McLeish: Thank you. I'm going to talk basically about three things: the concept of future loss of income on a net basis; something called the tort accident benefits interface issue, which is complex; and the matter of the threshold.
Firstly, with respect to the net income concept, in tort, it is an unfair concept; in theory, it is a good idea. It's unfair for a number of reasons. Number one, if a person receives future net income loss on a lump sum basis, any income from that lump sum is taxable and hence, the person will be undercompensated to the extent of the tax and the interest which would have been earned on the taxable portion.
Secondly, to calculate future net income loss on a net basis is virtually impossible to do for a number of reasons. One, a person's tax rate will never be known. He might have been in a 40% category, he may have been in a 20% category. More likely it will change throughout his life and we never know what the future holds for tax rates.
Mr Sampson: They go down.
Mr McLeish: Can you see that, Mr Sampson?
Thirdly, there's always a deduction, in my experience, for contingencies so if you're starting on a net basis, let alone 85% net, judges usually deduct in the neighbourhood of 20% for contingencies. Then there are non-recoverable expenses, because it's such a complex subject, for accountants' fees, economists' fees and yes, even legal fees.
One might think that the difference -- and here's a graph I've prepared, the top line right there represents gross income. That represents tax payable. Here a person is 20 years old; there they're 65 years old; there are their earnings. One might think that the tax payable is a nice smooth curve like that. That is in fact not the case. Tax payable will be a jagged curve like that. Gross income will stay fairly smooth.
There are all sorts of reasons for that; I've listed them down here. There may be child care expenses which will impact on the amount of tax a person pays, that's number one. Number one is the first child born, number two is the second child. Almost half the population gets separated these days; number three is spousal support. Number four represents an RSP contribution. Number five, a person can start receiving investment income from an inheritance or whatever. There's all sorts of factors that do impact on net income and make it a very difficult calculation. If you try and factor out these things, then you've got an artificial figure. You're not dealing with net income at all.
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The government has made an attempt to deal with that through the use of structured settlements which, in theory, is a very good idea, but there are many, many circumstances when a structure is not advisable. The first one is when interest rates are low. We're in a period like that now. The return is very poor. The second one is when a person has outstanding debts which can be paid with a lump sum settlement. You read in the paper, that's most people these days. Thirdly -- and this is a very, very important one -- when structured settlement payments need to be indexed to keep up with such things as inflation and future productivity gains. I've got a chart that I will show to you which shows the effect on the annual payments when that occurs, and that has to occur; long-term inflation is 5%. When a person has access to good investment advice, a structure is not a very good idea, and when the structure broker takes an upfront commission, which is almost all the time, the person's immediately losing part of his investment.
Here's an actual printout of a 22-year-old person structuring $100,000 with 0% indexing. Here's the person's age, 22, and I've just got the first page here. The payments are almost $7,000 per year on $100,000 with zero indexing. Perhaps not a bad after-tax return but, as I say, there has to be indexing, there must be indexing. Look what happens to those payments when you just index at 3%. There's 3%, the same $100,000; 3% is not nearly sufficient indexing when the long-term inflation is itself more than that. Look what happens to the annual payment. It goes to $4,500 and change and, as I say, 3% is insufficient.
A more realistic rate of indexing is probably 6%. The initial payments in the first year at indexing of 6% is $2,640. So while in theory a structure is a good idea, in practice it doesn't make much sense.
I will now talk with something called the tort accident benefits issue. Let me tell you what is happening in the courts out there right now. This is an example: An injured person has a pain and suffering claim worth $50,000, has a future loss of income claim and tort of $250,000 for total damages of $300,000. Now, let's assume that person is getting accident benefits which have a present value of say $200,000. So far, so good. Let's assume accident benefits are being paid at the time of the tort trial.
With the tort accident benefits interface issue, the judge now is obligated to deduct the present value of future accident benefits which might be payable in the future -- might be payable -- so that's $200,000 in this case. So the injured person's total damages were $300,000, the present value of future accident benefits which might be payable is $200,000, the net recovery is $100,000. Nothing wrong with that if the person is going to get future accident benefits for the rest of his life. How can anyone know that?
That tort trial ends, that person walks out of the courtroom. What if the accident benefits insurer stops paying accident benefits a week or a year after the tort trial? What then happens? What are the options for the plaintiff? Do nothing. That plaintiff is undercompensated to the extent of $200,000. Start an action before the OIC? If the plaintiff is successful before the Ontario Insurance Commission, what can that person get? Can he get the present value of future accident benefits for life? Absolutely not. All he can do is get accident benefits up to the date of that hearing. The insurance company pays up to the date of the hearing; he walks out of there with $20,000 or whatever. Six months later the insurer stops paying accident benefits; he's back again.
Remedies in the court are no better. Just let me tell you what is involved with that tort accident benefits issue as it now exists, and the language is the same in the proposed legislation. Here's how we resolve that issue: We have our trial. We complete our trial on liability and damages and a judge comes out with his decision, or the jury does. Then we start the second trial, or the trial within a trial. Why? Because we have to determine the present value of future accident benefits which might be payable. We will never know the length of time for which they might be payable. There are three expert witnesses each side needs: a doctor to give evidence on the injured person's worklife expectancy; an economist to predict what the nominal rate of interest will be over the person's worklife expectancy; and an actuary to give the present value of those figures. That kind of hearing can take two or three days, and the cost of it is immense.
Now, I've been critical of the legislation. it would not be right of me if I came here and didn't offer you a solution to the problem. There's a very elegant, simple, inexpensive solution. Let's take the same person again, the same damages: $50,000 for pain and suffering, $250,000 for future loss of income. Total damages are $300,000. The present value of future accident benefits which might be payable in the future is $200,000. By the way, it makes no difference to the example whether the accident benefits insurer is or is not paying accident benefits at the time of trial. The defence lawyer in the tort action always takes the position that he is entitled to the deduction for accident benefits which might be payable. That's how the legislation reads.
The plaintiff receives a sum of $300,000 in total damages. Now here's the way to solve the problem: Accident benefits are then assigned by the injured plaintiff to the tort insurer and paid to the tort insurer. The plaintiff keeps his $300,000. If the accident benefits are terminated one week or one year after the trial, it's the tort insurer that has the direct right of action against the accident benefits insurer. The plaintiff does not need to get involved again.
Here's the important issue: That concept is industry-neutral. If a tort insurer gets treated unfairly by an accident benefits insurer, fine; they can sue. They may lose on that particular day, but the next case the next day, that accident benefits insurer is going to be in the position of the tort insurer and vice versa, and in the long run that concept is industry-neutral. It will wash out and you will not have innocent accident victims being deprived of fair and reasonable damages. That solution is in my paper.
The last thing I will say to you is with respect to the threshold and the deductible. If I have someone come to my office and I'm a plaintiff's lawyer and that person has a significant injury -- a fractured tibia, fibula -- if that case is worth $200,000, is that person going to undertake that case for $5,000? No. Is that person going to undertake that case for $25,000? No. I would say from my experience that the $15,000 deductible, combined with the threshold, is effectively acting as a $30,000 or $35,000 deductible in those kinds of cases, and in this province and in this country it takes a very significant injury to get to that level.
Other comments, not criticisms but helpful suggestions, are in my paper. I thank you very much for your time.
The Chair: Thank you very much, Mr McLeish. I thank Mr Nolan and the Ontario Trial Lawyers Association for the presentation.
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DOMINION OF CANADA GENERAL INSURANCE CO
The Chair: Our next presenter is the Dominion of Canada General Insurance Co, Mr George Cooke. Welcome to the committee.
Mr George Cooke: Good morning, Mr Chairman, members of the committee. Two days ago I appeared before you on behalf of the Insurance Bureau of Canada. Let me acknowledge our support for the submissions of IBC. Today, I am here as the president and chief executive officer of the Dominion of Canada General Insurance Company.
The Dominion is 100% Canadian-owned, one of the largest property and casualty insurers in the country, and one of the largest auto insurers in Ontario. We have served the needs of Canadians since 1887, when Sir John A. Macdonald was our first president. Background information about the Dominion is found in appendix 2.
It is helpful to understand what is wrong with the current product before we try to fix it. In my view, one of the major problems associated with the design of Bill 164 is that it attempts to predetermine the outcome or entitlement associated with 100% of all possible circumstances. This leads to a product which is overly complex and, as such, provides substantial overcompensation for many. This arises because notions of indemnity are replaced with notions of entitlement. For example, someone with no income prior to an accident may collect income benefits post-accident because of entitlement provisions. It is this factor alone that clearly demonstrates why a pure no-fault system cannot work appropriately in this province.
We support the government's approach to product design, which we believe can ultimately translate into good news for good drivers. The reintroduction of tort for economic loss allows the existence of a much more moderate no-fault component and the opportunity to tailor-make solutions for the most difficult cases. In so doing, it reintroduces the principle of indemnification. Polling shows that 67% of Ontarians support the return of tort access for economic loss. The provisions for optional coverages are clearly an additional victory for consumers, allowing them to better match their purchase to their need.
Without -- and I underline and emphasize the word "without -- " product reform similar to that outlined by Mr Sampson, our company, which has maintained adequate rates through annual rate filings, would increase rates on July 1, 1996, on average, by 10%. This increase can now be avoided. Our average premium of approximately $1,000 will not be increased.
If the changes recommended by IBC, particularly with respect to the control environment for medical/rehabilitation/attendant care costs, are incorporated by the government, we will be able to reduce prices for good drivers by up to an additional 5%. These good drivers can save 15% this year. Good drivers deserve a break, and with increased tort access for economic loss, those who are claims-free and conviction-free can get a break.
You've got to understand that when we're talking about trend in these matters -- and I think this is something the committee may have missed -- these increases in trend don't start applying on July 1, 1996. The first year increase is avoided, and so there's a substantial saving in the first instance.
In making these observations about what we believe we can do with our prices, we happen to believe that our ability to manage claims fairly and effectively is better than that of many of our competitors and therefore, although industry trends may be 6% to 7% with the IBC proposals incorporated, we think we can do better.
The historical medical/rehabilitation trend is materially in excess of the trend associated with tort bodily injury. Overutilization of medical/rehabilitation programs and the increasing prevalence of unsubstantiated therapy and feel-good treatment are very costly. The expenses arise from excessive entitlement provisions, lack of insurer control, and poor information and management systems.
What this tells me is that if we have a product with a substantially reduced basic medical/rehabilitation component and an increased tort bodily injury component, then the observed differences in the trend will produce a result which is materially more stable. Combined with extensive claims control features, such as an insurer's veto and outcome-based accreditation of health care facilities, the result will be a very sound product with price stability.
Let us look at trend for a few minutes. I'm going to try to simplify what you were concerned about on Monday. To illustrate, accept that trend, substantially, consists of the following: In the copy of my remarks that you have you'll see a chart which lists four components -- cars, wages, med/rehab and tort bodily injury. It then indicates the trend and the insurer control.
The cost of cars, safety features and replacement parts are increasing above the rate of inflation, at about 4%. We don't have any control over those costs.
Wages can likely be held to the rate of inflation. We don't have any control over those costs either.
Med/rehab costs have trended at over 25%. On Monday, Mr Miller indicated that he capped that historical trend at 15% in his costing to reflect improved controls in the government's proposal compared to those in Bill 164 and OMPP. We believe that the control here can be further improved.
The tort bodily injury trend is based on historic observation of accident year results, which is the proper way to assess trend. The government has proposed improvements to help control this trend, including the disclosure of information at the time of claims statement etc, which we think are positive, but contingency fees, if introduced, may make this trend somewhat worse. That 7% number is likely a pretty good number.
Clearly, though, you must include that trend has nothing to do with the consumer price index. And looking at these numbers, if trend is to be reduced, medical/rehabilitation costs must be reduced.
Incidentally, in response to a question from Mr Wettlaufer, our operating costs in aggregate have declined in absolute terms over the last four years. At the same time, the costs of administering elaborate medical, rehabilitation and attendant care programs have increased substantially.
Somewhere in the range of 40% to 50% of the payout associated with a whiplash soft-tissue type of injury goes not to the victim but to case management, as we try to manage these elaborate and very poorly controlled programs.
Comment has been made that costs of transition to a new system will be substantial and will increase prices. This is not true. Transition costs may be substantial -- we don't know -- but they are absorbed by companies and are not recovered in rates. If I incur substantial costs this summer during a transition, my prices are already set. Those costs flow to my shareholder. They do not flow to the consumer. Auto insurance prices are set prospectively, and so this transition cost argument, albeit an important factor for all of the industry, is not one that the consumer need to be worried about.
I' sure that by now you are aware that I have concerns about the cost of medical/rehabilitation treatment. Obviously, injured people require treatment, good quality treatment. Insurers need to be able to ensure that their insureds receive good quality treatment, not less than they need but also not more than they need. But -- a very important "but" -- unnecessary medical treatment is currently being provided. It is costly and it is harmful to insureds. Our current insurance system, in its broadest sense, permits conflict of interest involving health care providers, the legal community and others.
Part of the solution to these two concerns lies in the product design I have already noted. Another part lies in the proper outcome-based accreditation of medical facilities. I understand that yesterday a number of physiotherapists offered views somewhat similar to mine in this area. It's very rewarding.
For your consideration, I have included a copy of a presentation on these concerns which I made recently. It's in appendix 3. I would like to highlight the part of that presentation addressing conflict of interest.
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The insurance industry is concerned about those who have a financial interest in the clinics to which they refer their patients. For example, a recent study found that the frequency of treatment is about 40% higher and costs 30% to 40% more for patients at a clinic owned by the referring physician. Patients were also 50% more likely to be referred for therapy if the referring physician has a financial interest in the therapy clinic. It is interesting that disclosure of the conflict of interest did not lessen the high rate of referrals, treatment duration or cost. Those studies were included in appendix 4.
I have not yet mentioned those circumstances we face daily when some lawyers have a financial interest in the clinics to which their clients are referred, or the convenient financial arrangements between some lawyers and some medical practitioners to increase their respective workloads through referral.
All involved in the task of returning the insured to pre-motor vehicle accident activities as soon as possible must share this common goal. Without strong controls, including outcome-based accreditation for facilities, and the right to direct care, there is no guarantee that this goal will be achieved.
Changes are also necessary to the way in which our industry is regulated.
(1) A new product should allow for substantial change to the mediation and arbitration practices of the Ontario Insurance Commission. Today the process is too costly, too slow, too imbalanced and too uncertain.
(2) Rate regulation should move to a file-and-use as opposed to a pre-approval approach. This change will encourage a more competitive marketplace and, in addition, it will reduce cost.
(2) Insurers must be allowed to collect underwriting information relating to collateral benefits, income and occupation. Without this information, those writing individual risks will continue to face unfair competition from those writing group plans. Group plans are essentially surrogates for this information and if individual writers are not allowed to compete fairly, the group regulations should be scrapped in the public interest.
(4) If the 5% provincial sales tax were eliminated as a separate tax, and instead blended with the 3% premium tax, there would be no revenue loss for the government but the administrative costs for brokers, companies and government would be reduced. The result is an easier interaction with the consumer and less cost and waste in the system.
These are only four suggestions. There are a number of others that were detailed by IBC which we endorse.
In conclusion, we have an opportunity to resolve the many auto insurance issues correctly this time. I compliment Mr Sampson for allowing us to discuss his draft proposals before introducing legislation. I urge the government to carefully consider all the views expressed to this committee and look forward to a stable environment in which to operate. As a Canadian company, this is the only environment we have.
The Chair: We have time for a round of two-minute questions. We start with the third party.
Ms Lankin: Two minutes is just not enough.
The Chair: I realize that. It also includes the answer.
Ms Lankin: Definitely not enough.
The Chair: I apologize for that.
Ms Lankin: The numbers that have been put forward by the industry and some of the conflicting positions put forward are difficult for this committee, there's no doubt. In the insurance industry's estimations, even under Mr Miller's actuarial assumptions, rates are going to continue to increase under this new plan. You've downplayed that very much from your company's point of view, but we had Zurich here and we will have Co-operators and others -- State Farm are here -- who in fact disagree with the position you've put forward.
But I have some problems between what we're hearing from you now and what we heard from you a couple of years ago. I've gone back and taken a look at your presentation before the standing committee on Bill 164. There, contrary to your position now that's it a good idea tort's being reintroduced, you were deathly set against it. Your quotes were quite dramatic.
At that point in time, you also said that the OMPP product was underrated or underpriced by about 12% to 13%, and those increases would come in in 1994-95 irrespective of Bill 164. I guess the point I come to is that it's very difficult for this committee to know from the insurance industry what they really expect to happen. You also made a very serious point about road safety initiatives back in 1993, like graduated licensing. I haven't seem any rates go down as a result of that. I haven't seen you refer to it. Could you perhaps give us a sense of where this is really going to go, and why your numbers or your projections are so different than Zurich's or Co-operators', for example?
Mr Cooke: I'll try to respond, Ms Lankin, and thank you for noting that I appeared before this committee some three years ago almost to this day. At that time, I did express concerns about tort and, in particular, what I was concerned about at that time with Bill 164 as the wide-open season for general damages. Subsequent to those hearings, the government of the day restricted the tort access for general damages, arriving at the verbal dollar-threshold combination that has been slightly modified by Mr Sampson. Those were where my tort observations were focused. Frankly, if you also look at those remarks, I openly advocated tort for economic loss at that time; I always have.
In terms of OMPP, as many of you know, I was part of the group of civil servants who were otherwise involved in its design and construct. One of the problems with OMPP is that it was put into place quickly without the opportunity to put adequate controls in place for the med rehab accident benefit components. There was a two-year review, because people were very much aware of the fact that those controls weren't in place, and at the two-year point in time the government of the day was more interested in nationalizing the industry than fixing the product.
In terms of road safety, I was a champion of graduated licensing and I still am. I think it has had a very positive effect. It is not yet mature enough that we can clearly isolate those factors, but we are tracking them. Frankly, as a company, we will continue to offer price reduction wherever we can for good drivers and to support those kinds of safety programs.
In terms of the differences between our position and Zurich's or for that matter Co-operators', I have no idea where Co-operators are. You obviously seem to have some advance knowledge. I think they're going to present behind me so I've not heard the remarks.
In terms of the Zurich position, I just very strongly disagree. For whatever reasons, Zurich seems to think that the nasty actor in all of this is tort. There's absolutely no historical substance to support that assertion and, frankly, the charts this morning were not particularly compelling. I think if they were probed, you would likely find that the kind of trend I'm talking about in terms of tort would appear, as it has in Mr Miller's material.
What can I say? In a comparative marketplace, reasonable people differ. That's one of the attractive aspects of a competitive marketplace. We believe in the product construct Mr Sampson has outlined with amendments, that we can maintain stable prices and can in fact right of the bat offer price reduction. Our prices are adequate. Perhaps the companies that have concerns with this don't share that positioning.
Mr Wayne Wettlaufer (Kitchener): George, thanks for coming today and appearing before the committee. You probably heard that Rob Sampson said yesterday that if the price increases are 7% to 8%, obviously changes have to be made to the proposed plan. One of the concerns I have, knowing a little bit about the industry, is the inefficient -- no, I shouldn't say inefficient, inefficiencies that exist in some of the insurance companies' claims departments. If these can be addressed in the very near future through increased training, could we reduce the trends that you show?
Mr Cooke: I can only speak for my own company. I'm very proud of the people in our claims area. We have engaged in extensive training over the last few years. We also have introduced absolute state-of-the-art claims management technology. There's nothing in the industry that compares with it.
With these kinds of changes and improvements, we believe there's certainly a part we can play in terms of helping to control and manage these costs. The problem for us is that we need the opportunity to do that. If we had, for example, outcome-based accreditation facilities, I think the consumer and the politician could be much more at ease with allowing us to direct care to those facilities, because everybody would know that those facilities were good facilities.
When I say "outcome-based," I want to differentiate it from process-based. I don't want to just know that there are good, qualified people there; I want to know that these people can actually demonstrate clear, beneficial results in terms of shorter durations of treatment, reductions in cost, improved outcomes in terms of returning people to their pre-accident status. If we are allowed to have those kinds of controls so that we can direct and manage care instead of having to spend 40% to 50% of our payout dollars fiddling around with elaborate bureaucratic nonsense to placate those who may mistrust us, then yes, we can make substantial gains and those trend lines will come down.
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Mr Bruce Crozier (Essex South): Over the past year and half or so when I've met with you on numerous occasions I've valued your opinion. As has been mentioned, we all realize around this committee table that the increases that have been suggested so far have to be addressed and that we have to find areas where we can reduce that somewhat, yet your presentation this morning doesn't address any specific areas where you think we can get away from the 7%, 8%, 9% increase that the IBC has proposed and that I suspect you were part of preparing, so you must agree with to some extent. Are there no areas where you feel we can start to address the problem with the legislation as it's drafted?
Mr Cooke: Let me be very clear: The IBC has not proposed the product that otherwise gave rise to the 7% or 8%. What we have said is that the draft version of the construct before this committee would give rise to trends in that order of magnitude. IBC included two very detailed appendices of some 20 pages or so in length, outlining very specific, detailed suggestions as to how these controls could be put in place that would reduce the trend associated with those areas.
I've gone further than that, perhaps at a high level, but advocating things like outcome-based accreditation of facilities and urging people in the broader sense -- I fully appreciate that the mandate of this committee is too narrow to deal fully with all the conflict-of-interest concerns that I've given rise to. But my analysis that I've put to you tries to help us focus, I think, by looking at the components of that trend, to help us focus on what it is we need to look at. Very clearly, if you've got the kinds of components the way I've set them out, and I've tried to make them simple, it tells you where to look.
When you go look in the medical rehab area, you find some very wonderful, dedicated, skilled people truly trying to help people. You also find substantial amounts of abuse and a great deal of inefficiency that's imposed on companies having to deal with the elaborate mechanisms that flow out of this entitlement notion as opposed to one of indemnity with tort. I would argue that by very clearly setting out product design, there are features that can help mitigate that trend substantially.
The Chair: Thank you very much, Mr Cooke. We appreciate your presentation and that of the Dominion of Canada General Insurance Co before the committee.
ONTARIO BRAIN INJURY ASSOCIATION
The Chair: We now welcome the Ontario Brain Injury Association. Mr Guinan, welcome to the committee.
Mr Richard Guinan: Thank you.
The Chair: Is it Miss Baptista?
Ms Barbara Baptista: Barbara. Ms.
Dr Robert Gates: Good morning. I'm Robert Gates.
The Chair: Welcome. Please proceed.
Mr Guinan: The Ontario Brain Injury Association is pleased to have the opportunity to present its views to the standing committee on finance and economic affairs. This important and timely legislative initiative will affect the lives and health care of thousands of Ontarians who depend on their automobile insurance coverage to protect them in the event of injury in automobile crashes.
Before I get into the formal presentation, I'd just like to share with you some statistical information that is not part of this brief, but will at least give you some idea as to the magnitude of the problem we face as an association every day.
In the province of Ontario, some 12,000 to 15,000 people per year suffer brain injury, 64% of which is caused as a result of car crashes. Out of those, approximately 2,000 to 3,000 will be left with permanent impairment.
The Ontario Brain Injury Association exists to educate the public about brain injury, to provide information about the prevention of brain injury and to ensure that persons with brain injury have access to reasonable and appropriate services to reduce disability and handicapping conditions and to promote community integration.
We compliment Rob Sampson on his initiative and we support the reintroduction of the tort for innocent accident victims. We support the streamlining of the process of accessing medical rehabilitation benefits. We support the establishment of the committee to oversee the selection and operation of the designated assessment centres. We support the retention of the $1-million limit for medical rehab benefits for serious brain injury and the separate $1 million for attendant care. We also support the streamlining and strengthening of the dispute resolution process and the assessment of insurers for health care costs.
However, in reviewing the draft legislation, OBIA has identified several aspects of the proposals which require clarification and amendment, and hopefully this morning we'll be able to provide you with that kind of clarification. First of all is the definition of "catastrophic impairment," and Dr Robert Gates will speak to that in a moment. The limited ability of children and students and unemployed to sue for future economic loss is a concern of ours; the unrealistic monthly limits for attendant care expenses, specifically on brain injury issues; no specification of mandate and powers of the designated assessment centre committee; lack of an explicit right of insured persons to treatment and the right to select their own health care provider; unrealistic time limits for notification of insurer; and unrestricted insurer examinations.
The first area we'd like to deal with is with respect to the definition of catastrophic injury, and I'll ask Dr Robert Gates to speak to that.
Dr Gates: Good morning, ladies and gentlemen. I'm here as a consultant to the Ontario Brain Injury Association to help advise it on the technical issues involved in trying to achieve a reasonable definition of "catastrophic impairment." I'm aware that you've probably already heard from other groups that there are some problems perceived within the professional community with this definition as it applies specifically to brain injury.
What I'm going to tell you today is that the current proposal, which is to use the Glasgow coma scale, should just be dropped. It's just not appropriate to use this particular indicator to assess impairment following a brain injury, and I'll just try to very quickly run through some of those reasons. I think you've probably already heard a few of them.
The Glasgow coma score was developed by neurosurgeons in the early 1970s to assist in the acute or emergency medical management of coma. It was never developed or intended to be used as a measure of impairment in the long term following brain injury. There is literature to show that the Glasgow coma score does have a correlation with outcome when you look at large groups of patients, particularly when you look at people with severe brain injury. But the literature does not support in particular the validity of what are called single-point differences in the scale.
For example, the current draft legislation reads -- or I think it's the regulations, actually -- that a catastrophic impairment is a score of nine or less on the GCS. Well, there's no literature to support that the needs of people who obtain a score of 10 are in any way any different from those who obtain a nine. I think that for the committee and for the government to rely upon the GCS to validly and fairly make that discrimination is just wrong.
There are other technical problems with the GCS. It's not always measured. It sometimes is measured after the person has regained consciousness. Automobile accidents don't always occur in the middle of cities where ambulance attendants can arrive within minutes. Sometimes they occur in the middle of the night in remote areas. The GCS sometimes cannot be obtained because of other medical conditions that are present, such as intubation or medically induced paralysis. We've summarized in the brief a variety of technical reasons for dropping it.
But we realize that this sort of criticism puts the committee in an awkward position, because some objective means of defining "catastrophic impairment" needs to be presented, and we're here today to tell you that we have a concrete alternative for you. It's a scale with a very similar name, and that's because it was developed by the same group, in Glasgow, Scotland, in the 1970s, and it's called the Glasgow outcome scale.
This particular scale was developed specifically to measure outcome after brain injury. It's very widely used in large group studies of the outcome of patients after brain injury, and it's the most frequently cited measure in the research and clinical literature on outcome after brain injury.
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Mrs Marland: Excuse me, Mr Chair. I'm sorry. I'm having a little difficulty hearing you, and it's not your fault. The door has been opened and closed a number of times. We can't increase the volume without having feedback, so if you could speak up a little, please.
Dr Gates: I'll do my best.
The Vice-Chair (Mr Tim Hudak): You could probably raise the mike a bit. It bends. There you go.
Dr Gates: Is this any better? Okay. I know I'm going quickly, too, because there's a lot to say and we realize we've got a short period of time. So I'll try to sum up and let the other presenters carry on.
We've included a written brief which you can look at later which gives our expanded reasons for using the Glasgow outcome scale. But, very briefly, this scale, in our view, is ideally suited to measuring impairment and disability after brain injury.
Our point is that, after all, for purposes of treatment, what we really need to measure is the person's needs, their actual impairments and disability at the time they present themselves for treatment, which may be within weeks or months following an injury or may be as long as years later. The professional community needs a measure that is going to be applicable in those situations. I'll leave it at that and perhaps there may be a question or two once we're finished.
Mr Guinan: In the brief, we've also noted the limited access to tort for students and unemployed individuals. We feel that because brain injury is such a catastrophic and complex disability, this section of the act needs to be rethought, as we believe it's unfair. A child who suffers a brain injury may not have an opportunity to ever be employed, and in fact our statistical information will reflect that the majority of people after a brain injury are unemployable. I think it's an area of the act that has to be looked into.
I'd like to pass it on to Barbara Baptista, who's the chair of the Ontario Brain Injury Association, for her comments on some further issues of concern.
Ms Baptista: The complexity of brain injury gives rise to so many critical issues that relate to this legislation, understanding that the majority of brain injury is a result of automobile collisions. Just this morning I heard somebody on TV say we are in an era -- the information age, we call it -- where it's the brain's activity and not the body's activity that becomes the demand on a person. So you can understand how concerned we are about any legislation that relates to brain damage.
One of the critical areas, and I've heard this from the speaker just before us, is the whole area of choice -- consumers' choice, I'm talking about -- for the interventions and the rehabilitation service that they receive. Unfortunately, the actions of many insurers are that they arbitrarily cut off rehabilitation, delay treatments or utilize stop-type procedures.
I have appended, or we have appended here, the Ontario Brain Injury Association, and I'm going to make reference to it, some letters and reports, some received by the insurance industry, where treatment has unilaterally been denied, no rationale, and I'd like you to look at one from a health care practitioner here, a report. I'm going to quote just portions of this, but I would really advise you to read all of the appendix.
He's talking about, "I called Ms Jones," an insurance adjuster, because she has stated that she was disappointed by the rehabilitation report. He states:
"It turns out that the report was disappointing because it recommended rehabilitation. It was Ms Jones's opinion" -- and these are fictitious names, by the way -- "that Mr Smith did not warrant rehabilitation because (1) he was a no-good drunk before his accident and (2) he was too disabled to benefit from rehabilitation."
These are actual cases. This is the real letter, with fictitious names, that went out.
Another part of this:
"The insurer has stated openly that the desired goal for Mr Smith is placement in a nursing home, with costs borne by the government."
This is a very critical statement here for anybody in the rehabilitation profession:
"As such, the insurer places this facility and the professionals that provide services at Quality in an ethical dilemma. Do we simply put the man out on the street?"
You can see all the dilemmas there. This is an individual with cortical blindness. This is severe brain injury: Glasgow coma scale 4, low-level neurological function at the time of the accident.
"Ms Jones," the insurance adjuster, "has never met Mr Smith, nor had she based her opinion on the assessments of other doctors. I must conclude that her decision was based exclusively on financial considerations for the insurer."
There's another fax that just came in to us yesterday, written by the insurer, and the names of the insurance companies have been blocked out, because there's not a particular insurance company. This is a pervasive problem that has to be addressed for persons with brain injury. It is critical. The costs to other systems, whether it's CPP, whether it's workers' compensation, whether it is our welfare system, and certainly to the Ontario hospitalization insurance plan, are extensive.
The insurer has written here, in their own handwriting, "I will authorize each individual step as we see fit here at" the insurance company.
How can you measure outcome of a rehabilitation plan, whether it's facility-based or non-facility-based, because rehabilitation exists within the community -- and the Ontario Brain Injury Association is concerned about the community. It exists within homes, it exists within worksites. How can you measure it if a plan is not being followed?
If a mechanic has to fix a car and somebody says, "Well, you can only do that part," and the car needs other parts fixed, that car's not going to operate, and how can you measure outcome? And then you blame the mechanic.
That's inappropriate, that is not acceptable, and the Ontario Brain Injury Association has provided its wording to part XII, which addresses this issue, and our recommendation that you include in, I believe it's 61(1), that they "shall obtain such treatment and participate in such rehabilitation of their own or their own health care practitioner's choice...."
The costs in this process come from delay, and there are reams of literature on delay in the rehabilitation process and the cost to the system. It comes from misinformation and misguidance on rehabilitation plans.
I can tell you that people with brain injury want rehabilitation, they want treatment, they want to get better. But they certainly want to have input, and they need to have their issues, their needs, their concerns, their disability and handicapping conditions considered and there has to be sensitivity in that issue. That's essential if we are going to control any costs in that area.
I'll turn it back to you, Rick, on some of the other areas, because you will see that there are related concerns that we have around this whole issue of control of the costs and the involvement of the consumer in the process.
Mr Guinan: That brings us to the comment about the designated assessment centre committee. OBIA is pleased that they will appoint a committee to oversee the selection and operation of DACs. However, the draft legislation is silent on the responsibilities and powers of the committee. We recommend that these be spelled out in the legislation and the regulations so that there can be no doubt that the committee will act in the public interest.
Specifically, the DAC committee should be charged with the responsibility to report to the commissioner, the minister and the public on at least an annualized basis on the quality of work done by the DACs and the effectiveness and efficiency of the DAC system. OBIA feels that this is especially important in light of the increased importance DACs will likely have in determining the adequacy of treatment plans developed by claimants and health care practitioners.
We recommend for specific brain injury issues the Ontario Brain Injury Association should be part of that DAC committee. We have the expertise to understand the issues surrounding brain injury. We have no conflict of interest. We're a neutral organization that represents the best interests of the consumer, and we strongly recommend that we be considered in that particular arena.
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The brief itself outlines some more details with respect to some of the concerns we have, and it's all constructive criticism. I think it's important that you recognize that our interests are to protect the rights of people with brain injury. Our interests are also to make sure that insurers treat people in a fair and just manner. I spent 26 years in the insurance industry and I've always questioned whether insurers -- they're concerned about fraud from the public sector side; what about insurance fraud from their side? If you're paying a premium, you should get coverage. The fighting that goes on is absolutely unacceptable, specifically in this particular area.
So you folks will make the right decisions, I hope, and I hope you've listened and understand our position. We appreciate the opportunity to present this morning and we look forward to hearing some of the results of your deliberations.
The Chair: We appreciate your presentation. I'm afraid our time has expired. I'm sure if the committee has any questions, they'll be contacting you directly. Thank you for your time this morning.
CO-OPERATORS GENERAL INSURANCE CO
The Chair: We now have the Co-operators General Insurance Co; to present, Mr Terry Squire. Welcome.
Mr Terry Squire: Good morning. My name is Terry Squire. I am president and CEO of the Co-operators. Joining me today are Karen Lock, our claims vice-president, and Andrew Cartmell, our personal lines underwriting vice-president. I would like to begin by saying that we appreciate the opportunity to appear before this committee today.
The Co-operators is wholly owned by 32 co-operatives and farm organizations from across Canada. We provide insurance and related services to Canadians and have been doing so for more than 50 years. Although we operate in all provinces and territories, well over half of our activities involve the provision of insurance services to Ontarians. To that end, the Co-operators insures approximately 500,000 automobiles and 750,000 customers through a network of 180 offices, and we employ about 1,500 people in the province.
Clearly, we have a significant stake in the health of automobile insurance in Ontario. On behalf of our stakeholders -- our clients, staff and member owners -- we come here today to represent that stake. We wish to provide both an endorsement of many aspects of the draft legislation and regulations and to provide what we consider are valuable enhancements to other aspects of the proposal. Our objective is to achieve our shared desire for an available, stable and less expensive automobile insurance product.
We believe that Bill 164 should be repealed. While the Co-operators has worked hard to make Bill 164 a successful product for both our clients and our company, we believe that it is simply too expensive for consumers. The uncapped indexation feature makes the product particularly unstable over time.
We support the draft legislation in the following areas:
(1) We believe the accident benefit levels are reasonable and provide a humane level of care for any injured claimant, regardless of fault.
(2) We support the identification of catastrophic injuries so that benefit dollars may be targeted to those who really need them.
(3) We support the opportunity to purchase additional benefits. This minimizes the cross-subsidization of premiums and allows drivers who need the extra protection to purchase the cover. This provides further opportunity for our agents and brokers to offer sound advice and meet the real needs of our clients.
(4) We support the early active treatment provided by the minimum expense regulation for physiotherapy and chiropractic treatments. This ensures consistent, early treatment, which is critical to a person's recovery.
(5) We agree that the designated assessment centres should be maintained, as our experience to date has been very positive.
(6) We agree that the automobile insurance rate review process needs to be streamlined and support the changes outlined in the draft legislation.
That said, the Co-operators does have serious concerns with the draft legislation dealing with increased access to tort. Further access to tort will increase rates over time.
We assume the true intent of the legislation is to permit tort actions for those not-at-fault claimants who are seriously injured for an extended period of time. In our opinion, the legislation opens up tort to a greater degree than intended. Tort results in uncertainty for clients who know neither how much compensation they will receive nor when. Tort adds costs to the system. Tort has its place, but Ontario drivers cannot afford the cost unless the use of tort is restricted to claims in which a fatal injury, serious disfigurement or serious, permanent physical injury has been sustained. We urge the government to make this change, which is of course a change to the threshold.
If I can digress for a minute, what all those words really mean is, and I don't put a value judgement on this, but are we going to reward people who have soft-tissue injuries -- which is a nice way of saying "unproved," often whiplash injuries, and you have a headache for a period of time or a psychosomatic thing resulting from an accident, which is unproven. Are we going to reward all kinds of people for $10,000, $20,000, as much as $50,000? Some of you may remember in British Columbia they found that 50% of their entire premium was going in this, I'll say, soft area. It's a huge issue. As I say, I don't put a value judgement. If society wants those rewards going to people, you have to pay for them, and the price of automobile insurance will go up. So it's a value judgement in terms of price.
Back to the text. This more restricted threshold must apply to both economic and non-economic loss. I would like to emphasize there is not a tort-based jurisdiction in Canada in which we sell automobile insurance that has bodily injury tort trends of less than 15% a year. The greater the access to tort, the higher the annual bodily injury trends and the greater the risk of unacceptable rate increases. Contingency fees will simply exacerbate the situation. Again, we recommend a tighter threshold for both economic and non-economic loss.
As I stated earlier, we believe the accident benefit levels are reasonable. However, we would like to recommend the following changes:
(a) Optional indexing needs an annual cap, as included in many pension plans. Without an annual cap, this option is very difficult to price and, consequently, expensive to purchase. If you can't figure it out, you're going to take the worst possible case. That's just human nature.
(b) The definition of "catastrophic injury" needs to be clarified through the appropriate use of the Glasgow coma scale score after a reasonable period of time and by removing the ambiguity with regard to coverage for any other similar impairment or combination thereof.
By chance, we happened to sit and listen to the previous folks. I think the important thing for us is we need a scale that has general acceptance that we can relate to. By chance, up to now Glasgow has been generally accepted. If we don't have Glasgow, I think we need something.
(c) Case management fees should only be payable to qualified personnel. These services should not be used to support a tort claim.
In summary, rate stability is possible only through significant limitations on tort and timely, competent and expert provision of no-fault benefits. The Co-operators has proven that effective, proactive, no-fault claims management can contain costs in a no-fault environment. Claims management, combined with an effective mediation-arbitration process and impartial designated assessment centres, will work to provide long-term rate stability.
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Over the last five years, our accident benefits trend was plus 4.8% per year; that's much less than the industry in Ontario. Today, with the skill level and expertise we have developed, we believe we could improve on this trend and reduce it to close to the CPI inflation rate. This compares to tort bodily injury trends of 15% to 23% across the country. A tight tort threshold for both economic and non-economic losses, combined with reasonable accident benefit coverage, will deliver rate stability.
Finally, it must be remembered that no-fault was introduced in Ontario to correct many deficiencies in the tort system. Many accidents happen so fast that a split-second wrong decision can mean the difference between fault and no-fault. The innocent victim is not always easily determinable. Our objective is to return injured claimants to their pre-accident condition as quickly as possible and to compensate them fairly. That and rate stability are only possible with significant limitations on the right to sue, combined with fair no-fault benefits.
At this point, I would like to thank the committee for the opportunity to appear and welcome any questions you may have. We'll be looking forward to working with the government to ensure that Ontarians have an affordable, stable automobile insurance product for many years to come.
Mr Crozier: We're trying to sort out now, or are beginning to try to sort out some of the differences in the information that's presented to us. A previous presenter in the industry, Dominion insurance, in the med rehab area and the tort bodily injury saw trends of 15% and 7%, yet you're saying that in fact over the last five years your trend was only 4.8%. Can you help us understand the difference in those figures?
Mr Squire: I'll give you a general answer and then I'll ask my colleague, who deals with all the specifics. I think the previous presenter is talking about industry average trends. I've told you about our company trend, and I don't think I'm puffing up our own company when I say we're generally acknowledged in the industry to have done one of the best jobs in really trying to understand the previous legislation, the exiting legislation, and doing the best possible job in handling the claims. So we would expect, given our investments in claims servicing, that we would have a better trend. But I'd ask Karen to maybe give you a couple of specifics if she can.
Ms Karen Lock: We have focused on investing in our claims management and our claims representatives. We've increased our staff; we've reduced our file loads so they can spend time with our injured policyholders so they can assess the situation and find out what the real problems are. We have a written treatment plan that all parties are agreed to: that we spend time bringing the doctor in, bringing the employer, the treatment providers, the insured and their family into the situation so there are no surprises for anybody, that we're all working towards the same end. We truly believe in returning injured persons back, as best as possible, to their style of life before the accident.
Mr Crozier: What have your increases been, then, in insurance premium rates in the last couple of years, percentagewise?
Mr Andrew Cartmell: I can answer that. During the period of 1990-93, our rate increases totalled 4.6%.
Mr Crozier: That was under OMPP.
Mr Cartmell: Under OMPP. Then, with the change in the product in the increased accident benefit levels, we increased our rates 9.5% in 1994 and 10.8% in 1995.
Mr Crozier: Each of those is over 4.5%.
Mr Cartmell: Yes, they are.
Mr Crozier: So you had savings in other areas, then.
Mr Cartmell: We gave you our accident benefit trends as being 4.8% per year. What you're seeing there is the change in systems. Our accident benefit trend under the current legislation is actually only going up about 4.5% a year. The problem is that we had to go from a previous system with relatively low accident benefit levels to a new system with higher levels, and we are only permitted a certain increase by the Ontario Insurance Commission. So we simply have caught up to the new benefit level.
Mr Kormos: Following up on that, I recall the plan proposed to the Coulter Osborne inquiry. OMPP was in fact a more conservative version of the smart no-fault; OMPP imposed a more rigid threshold than the smart no-fault, which had its genesis in the insurance industry, and OMPP had a somewhat higher cap on the income replacements, again in contrast to the smart no-fault proposal the insurance industry proposed to Coulter Osborne during the course of that inquiry.
The problem is that under Bill 164, the wage replacement benefits were in fact reduced. It changed from 80% of gross, which was the formula -- mind you, with the $600 cap under Bill 68 -- to 90% of net. That's a reduction in benefits for the vast majority. Granted, the cap went up to $1,000, but the reality is that the $600 cap encompassed the vast majority of injured persons, be they innocent or at-fault victims.
My problem with this whole exercise is that the industry has never come clean on the savings generated by Bill 164, that is to say, the reduction in no-fault benefits, the reduction from 80% of gross to 90% of net; the fact that litigation, the access to tort for even catastrophically injured -- and that's the court reference to the threshold contained in Bill 68 -- was eliminated, replaced by mere no-faults; and the introduction of tort for pain and suffering was chimerical, illusory, because it had a deductible and the vast majority of claims for pain and suffering fell under that deductible, and the fact is that there are, as you know, precedented judicial caps on pain and suffering.
How come the industry has never come clean on the fact that there were reductions in no-faults, reductions in gross payouts because of the failure to permit people to litigate for economic loss under Bill 164? How come premiums have gone up, as the industry would have us believe, when in fact there were significant reductions in the payouts from 164 in contrast to 68?
Ms Lock: You are saying that you believe there were reductions in Bill 164?
Mr Kormos: Well, 90% of net is less than 80% of gross, no two ways about it.
Ms Lock: I'll come clean with our numbers, Mr Kormos. Our numbers are that our average weekly income benefit has risen 2.5%. Those are clean numbers; that's what we're paying under the current legislation, 164. And we've had reserve money for the loss of earning capacity benefit; that is going to be an expensive benefit to administer. We can pay it, but we can't continue with the current rates if we're going to be paying an indexed pension for life.
Mr Kormos: Go one further. How come the --
The Chair: Is it a short one further?
Mr Kormos: Yes, very short. That took 15 of my seconds, Chair. Gosh.
How come the industry isn't ad idem about the impact of this legislation? The IBC says it's going to generate controlled premium increases of 7%, near 8%. Zurich, the second-biggest seller of auto insurance in the province, comes in here talking about -- what were they talking about? -- catastrophic increases: 20%, 30%, 40% by the end of the day.
What's going on here? Is there some real whipsawing going on? Is there some real dishonesty about what in fact this scheme means? Is there an effort on the part of the industry to further reduce benefits payable by generating imagery of huge increases when the IBC says modest increases? Which side are you on?
Ms Lock: We're on the side that does not support a return to tort. We look at our position in Alberta. Our accidents are down by about 20% and our bodily injury claims have doubled, and if you look at the cost per year it's only going up. We've done all kinds of things to try and control our bodily injury costs in Alberta, and we still are rising by 15% a year compared to the industry 23%. We can deliver the return to tort, we can deliver anything the consumer wants, but we can't do it with the current rates.
Mr Ted Arnott (Wellington): Thank you very much for your advice. It's very helpful to the committee, and your constructive approach will help us in our deliberations.
One quick question. One of the presentations we had, one of your competitors, Dominion, indicated that under this proposal, they think they'll be able to give some good drivers a break in their premiums. Would you feel comfortable making that same statement today, or is it too early to tell what would happen under this proposal if it's implemented as is?
Mr Cartmell: Generally speaking, when a product change happens, as we've had twice in the last few years, normally the way the companies process the product change is to make a base percentage change across all categories of drivers. How a company would get at protecting certain pockets, the so-called good drivers, from the other drivers I think could only happen if the industry had an opportunity to recognize things like income levels, collateral sources, that kind of thing. Under the current rate structure and rate classification system we have in Ontario, I don't see how a company could protect certain pockets of drivers. When the product changes, given the rate classification structure we have, companies will apply the base change across everyone; everyone would see a 2% increase or a 5% reduction or whatever. Over time, if it turns out, because of age or sex or how much you drive or where you live, that changes would result from that, it may show up, but I don't know how a company could promise that at this point in time.
The Chair: Thank you very much. We appreciate Co-operators General Insurance, Mr Squire and your associates, for presenting to us today.
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CANADIAN BACK INSTITUTE
The Chair: We now welcome the Canadian Back Institute, Tony Meller. How do you do, sir?
Mr Tony Melles: It's Tony Melles, and actually, after the last question period, I thought it best to bring Paulette McGill up with me to answer any questions that might be forthcoming.
The Canadian Back Institute appreciates the opportunity to respond to the proposed draft legislation. We're going to be commenting on the recommended changes affecting medical and rehabilitation coverage. Our reason for doing that is that the Canadian Back Institute has been in business for 22 years in Canada, we operate 42 centres across Canada, and we believe we have some valuable input into the rehab arena.
In our initial meeting with Rob Sampson, we stressed the importance of introducing controls to the rehab industry, controls to ensure appropriate patient care, define service delivery cost, and eliminate the opportunity for abuse. Regulation is required because of the explosive growth in the number of rehab clinics following OMPP and Bill 164. Lack of regulation in the rehab industry has led to unnecessary treatment, prolonging illness and increasing costs. The recommendations in the draft proposal fall short of providing the controls in the medical and the rehab area. I think this is an important area where we can actually cut costs and save on auto insurance premiums.
We applaud the introduction of the mandatory written rehab plan. We think it's a good idea. It's going to force the rehab providers, the health care providers, to be accountable. It will also give the insurer an earlier opportunity to reject the claim by referring to a DAC for a med rehab assessment. However, this may create an adversarial relationship between the patient and the insurer, and we don't think that adversarial relationship is good for the policyholder. If the goal is appropriate rehab with minimal potential for abuse, we think the government should insist that all insured health care is provided in accredited facilities.
Some regulation could come through the accreditation process. It's interesting that if you have a motor vehicle accident in this province, a collision repair facility is required to meet more standards than our rehab facilities. They deal with fenders; we're dealing with human lives. It just does not make sense. The citizens of Ontario deserve the peace of mind that comes from knowing that the treating facility conforms to certain standards.
We recommend that all rehabilitation providers be accredited. This is not expensive for the policyholders or for the insurance companies. It's a cost of doing business for the rehab providers to pay for the accreditation. There are many agencies that perform accreditation. They should be external, non-profit, with a history of providing this service and with no link between the accrediting body and the payors or the rehabilitation providers. If we look south of the border, it's one of the few elements of the American system that has provided some stability for the rehab industry. It sets benchmarks that increase every single year.
A comment on the designated assessment centres: They obviously have a more prominent role to play in the new draft regulations, and we agree that these centres will be essential for dispute resolution. We're concerned, though, that because of the earlier opportunity to send people to a DAC, they're going to become overburdened. They're already overburdened; some of the waiting lists for the DACs are three to three and a half, four months. A situation might arise where a patient requiring treatment cannot get that treatment in the acute phase because he's been sent for an assessment. That's unacceptable.
The designated assessment centres should be combined so that both a medical rehab assessment and a disability assessment can be performed at the same location at the same time.
Additional things that need to happen:
We need to have more centres. The current waiting lists are too long.
There has to be standardization to produce consistent services. For those of you who recall how the designated assessment centres were set up, there was no real necessity to prove that you could provide any standard of service in order to do a disability assessment. I would suggest that you could take the same client in Thunder Bay and send him to a designated assessment centre, have him assessed the next day in Toronto, and you would get two different opinions. There's no continuity, there's no consistency, there's no common language, no common terms of reference, no common equipment used, no common questionnaires to evaluate either functional or psychological impairment. It's unacceptable.
Also, the fees need to be set up with a fee schedule. They should be reasonable.
I think the way we can get this consistency that we're all looking for is regulation through an accreditation body. This government has stated that it wants the premiums to decrease. Our sense is that the only way you can get these to decrease is to control the medical and rehab costs. We don't see how that's going to happen, given the proposed draft regulations. We think it is imperative that accreditation become the standard for rehabilitation providers and for designated assessment centres. Thank you.
Mr Kormos: I noted that you were sitting in the committee room during the course of the last presentation by people on behalf of the Co-operators General Insurance Co. I'm hoping you heard the reference there to soft tissue injury and what appeared to me to be a dismissal of soft tissue injury as something trivial and but a passing annoyance. The impression that was attempting to be created was that it had the impact of, oh, let's say a sliver or a bruised thumbnail. Obviously, none of those folks ever had sciatica or the pain and disability associated with soft tissue injury. Would you respond to that a little? My experience and the experience of the folks I've had to work with is that this can be -- albeit far more temporary, hopefully, but that's not always the case. Talk about soft tissue injury and indeed how serious that can be for the person suffering from it.
Mr Melles: Soft tissue injury is very painful, obviously. The literature shows that most soft tissue injuries will heal, with treatment or without treatment, 90% of the time within a very short period, four to six weeks. That doesn't mean there's a miraculous cure; it means that the symptoms stop. They could continue to have intermittent symptoms after that, but that doesn't necessarily mean they're removed from the activities of everyday living. I've had sciatica myself. I understand it's painful, but in spite of the pain, I could go on and carry on most of the activities of daily living after a short period of having to change my lifestyle.
Mr Kormos: But it can at the same time interrupt your employment and cause you to lose income.
Mr Melles: Yes. As a provider, it's more troubling a year down the road to see these soft tissue injuries that are totally disabled, when they don't fit into a pattern you recognize in the early stage.
Mr Kormos: Quite right, and I understand as well that the type of trauma that can precede what appears to be soft tissue injury can down the road generate things like premature arthritic conditions, situations like that. Is that a fair understanding?
Mr Melles: No. Actually, the medical literature wouldn't show that. The arthritic changes occur on their own, whether you're in a motor vehicle accident, whether you play hockey or whether you're gardening. It doesn't accelerate the arthritic changes.
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Mr Sampson: Thank you very much for your presentation. It's good to see you back again. I want to speak to the item about accreditation. I think you also spoke about setting fees and about treatment protocol, that the treatment plans follow treatment protocols.
I want to assure you that there's a reference to something called a DAC committee, a designated assessment committee. Our intention is to see that all those items fall within that DAC committee so for the first time in some time in this province the insurers, the practitioners and the people receiving the treatment can come to grips with, what's the appropriate treatment level and what should be the cost for that treatment level? Therefore, there's a roadmap for the industry and the insured and everybody involved to follow in making sure that the overall objective of everyone in this program, which is to get the insured back to the best state of repair possible, is achieved. Do you see some validity in this DAC committee? Do you see that it will have the impact we think it will?
Mr Melles: I think the DAC committee is a good idea. I still think, though, that it doesn't go far enough. I think you should have an external body that has no vested interest to do an accreditation.
Mr Sampson: You can have an accreditation system established, but if there's no ownership by the people involved in using that system, the accreditation system somehow falls apart. What I'm trying to drive at is that we want to make sure that there's some ownership in the solution by the people involved in the process.
Mr Melles: If you can get all the parties involved on that committee, I think it's a tremendous idea.
Mr Sampson: The intention would be that it would include as many of the stakeholders or interests as possible. Obviously, you can't have a room full of 50 people. By the way, that, I hope, will force some consolidation within the rehab industry of the various groups we're seeing in the rehab community. Again, get some ownership of the process here, something we have not had in auto insurance at all.
Mrs Marland: I was very eager when I noticed that Dr Hall was on our agenda this morning, so I'm disappointed that he's not here.
Mr Melles: We brought Paulette instead.
Mrs Marland: Dr Hall and his brother grew up in my riding and -- just a personal thing -- his brother went into dentistry, working with my husband. Dr Hall has become very renowned and very highly thought of because of the work he has done in what became such a finite specialty for him. I realize that when you're here speaking on behalf of the Canadian Back Institute, it's a very huge experiential base from which you speak. I didn't know you had 42 centres. Are those inside Canada and in North America generally?
Mr Melles: All inside Canada.
Mrs Marland: Then you're probably in a very good position to answer the question about the different periods that injured parties are off work and consequently on benefits as a result of auto accidents. Apparently, there is a difference in this period between Ontario and Quebec. I wonder if you have any information you could give us on that.
Mr Melles: Quebec has come out with the Quebec task force study, which I think most of the rehabilitation medical field is quite familiar with. They state that all injuries should be treated early; the earlier you get at them, the better they do. However, our experience in Quebec -- we have three centres in Quebec -- has been that they don't follow the Quebec task force guidelines. There tend to be very lengthy waits to get into rehab programs, and that results in increased costs to the system.
Mrs Marland: So it's worse in Quebec than in Ontario.
Mr Melles: Worse in Quebec, in our experience; also worse in BC than in Ontario.
Our experience is that most of the people involved in motor vehicle accidents get better in a short time and don't seek out treatment. About 10% of the people do, and those are the people of concern, and we have to channel those people into the right types of treatment approach. If they get into the wrong sort of treatment facility, it goes on for months and months, perhaps years. That drives up costs. They shouldn't continue to be allowed to spin in a cycle of needless rehab.
Mrs Marland: And that's where you come back to the accredited facility not being the wrong type of facility.
Mr Melles: Yes.
Ms Annamarie Castrilli (Downsview): I'd like to continue with the issue of costs for just a moment. We've had insurance companies tell us that the biggest component of cost is the medical rehabilitation component, and we've had victims say to us that they have to endure endless testing, primarily because they're not believed, and they have to go through this process. We've had others tell us that costs could be curtailed with early intervention. I wonder if you might offer an opinion with respect to those three elements of the cost issue.
Ms Paulette McGill: First, in terms of the accident victims exposed to the testing and assessments on an ongoing basis, it's insurers trying to determine what is appropriate for those individuals and struggling to understand why the cycling of treatment continues, which prolongs their disability, keeps them on benefits. That has been going on for some time now.
In that regard, if we go back to accreditation, if there are preventive measures in place prior to sending someone to a DAC or when the insurer receives a bill for expenses, that's where you stop it, not when you're presented with the bill and then you ask the insured person to attend at an assessment. It creates an adversarial situation from the onset, and that's very difficult.
Treatment providers for insurance companies -- and my background for some years was with the insurance industry. What I found was that insurance companies would pay a lot of these expenses and very often felt they weren't reasonable, but they did not have one regulating body to go to to say, "We need help with this." Facilities run in a multidisciplinary approach. There isn't one body that can help them, whether that be the College of Physiotherapists or Chiropractors, so they used assessments as a way to determine whether it was appropriate and fair. Very often, it just became a very costly venture. Insurance companies are paying out a great deal of money on expenses in terms of assessment and procedures to determine what an individual needs. That is what has caused the costs to rise so significantly.
In hindsight, had there been some form of accreditation from the beginning, when no-fault was introduced, when OMPP was introduced, we would have seen a very different picture today. You wouldn't see medical and rehab costs at the levels they are.
Ms Castrilli: It comes back to accreditation for you. That's how you reduce costs.
Ms McGill: At the Canadian Back Institute, that's what we believe would be the important key.
The Chair: Thank you very much. We appreciate your presentation. As a former patient, I particularly appreciate your presentation.
CANADIAN AUTOMOBILE ASSOCIATION ONTARIO
The Chair: The Canadian Automobile Association is the next presenter, Catherine Newell. We welcome you.
Ms Catherine Newell: Thank you very much. I'm here in my position as vice-chair of CAA Ontario, government and public affairs committee. I actually am based at the Hamilton auto club, or our new name, CAA South Central Ontario. That's my home club. Pauline is a colleague of mine, both from the Hamilton auto club and she also sits on the committee for CAA Ontario.
CAA Ontario is a federation of 10 not-for-profit automobile clubs representing the motoring and travelling interests of more than 1.6 million members and their families. Advocacy has been part of our mandate since 1903, when our first clubs were established -- they happened to be the Hamilton auto club and then the Toronto club -- and we appear here today in that capacity, representing the interests of motorists.
I just want to make a quick remark on the process itself. As this legislation will directly affect approximately seven million drivers and their families, we feel that the process of consultation has actually been too short and too compressed, particularly from the standpoint of public input from consumers.
We must comment about the recent history of automobile insurance in the province. In the past six years, motorists have adjusted to three, soon to be four, different insurance systems. Through this period, motorists as consumers have faced double-digit premium increases and general uncertainty about how long the system of the day would last before it was replaced. Given that automobile insurance is mandatory and most motorists consider their car a necessity, consumers have had little choice but to go along with the changes. What motorists want is an insurance system that balances the interests of rate stability in insurance premiums and fair compensation for injured accident victims.
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Concerning the draft legislation before us, CAA Ontario believes that overall, the amendments are improvements to the present legislation. At the public hearings for Bill 164, we argued in support of consumers retaining the right to sue for economic loss, and we are pleased to see that the draft legislation before us does address this issue. We remain extremely concerned, however, about the high cost of premiums.
We understand that this legislation is intended to stabilize the price of premiums, yet we have heard the predictions from the Insurance Bureau of Canada that this legislation will result in premium increases of between 7% and 8% for each of the next five years. Clearly, this is unacceptable. During the election campaign, the Premier promised a new system that would lower rates. This legislation falls very short of the Premier's promises.
Lower premiums should still be the goal. Rate stability would be acceptable, but higher premiums are intolerable. If this legislation can be amended to achieve stabilization of insurance rates, fewer motorists are likely to drive underinsured or, worse, without insurance. If this legislation does not stabilize insurance rates and we continue to see significant increases, more motorists will simply take their chances and attempt to drive without insurance.
In the pre-budget consultations delivered last week, CAA Ontario called for the removal of the 5% tax on mandatory automobile insurance policies. Since skyrocketing insurance premiums are due in large part to recent legislative changes to the Insurance Act, the government should be prepared to alleviate the burden on motorists by removing this tax.
As mentioned earlier, overall, CAA Ontario finds the draft legislation to be an improvement over the present legislation. However, it may not be enough of an improvement with respect to stabilizing insurance premiums. In general terms, we are happy to see that the right to sue has been expanded, and for the most part the new accident benefit regulations seem to be appropriate. In principle, we agree with optional top-up coverage for higher-income motorists who wish to supplement their basic coverage. We agree that they should be the ones paying for those higher benefits, and not, as it has been over the last few years, subsidized by the entire group of motorists.
We worry, though, about the level of consumer confusion surrounding the shopping list of optional coverages. We recommend that an education program be initiated immediately upon passage of the legislation to fully inform the public about the levels of coverage now available and the costs associated with the new options. My understanding from a recent conversation with the Insurance Bureau of Canada is that the different combinations of possible coverages mean approximately 250 different plans. That, for consumers, will be terribly confusing. There's a part all of us can play, and certainly the insurers can play a part in this process, as well as the insurance brokers, who will be key. We have a genuine concern that many motorists will find themselves underinsured, overinsured or inappropriately insured for their circumstances.
The introduction of neutral evaluation should have the desired result of providing more options for settling disputes before going to arbitration or the courts.
We are worried -- and this is probably one of our most key points -- that the threshold for tort for non-economic loss and the deductibles for non-economic loss will be clarified or prescribed by regulation. Regulatory changes are not subject to the same process as legislative changes, and we feel that to be able to change such a significant component of the act must not be by regulation alone. While we understand the desire for flexibility, it is critical that the compensation thresholds not be changed except by legislation. An example of that is, if it were passed that it could be just changed by regulation, a $15,000 deductible could be a $50,000 deductible 10 weeks from now, and that would fundamentally change the type of insurance compensation scheme consumers and motorists believe they are receiving. If the intent with this is simply to be able to allow it to move with something like the consumer price index, to tie the $15,000 threshold to inflationary dollars five years from now, that would be fine, but state it in the legislation, if that's the intent. Anything other than that we would not support, and we definitely do not support that it be by regulation.
We have serious reservations about the paragraph that is described as "a consequential amendment which permits the Lieutenant Governor in Council to prescribe the health care costs that may be recovered from automobile insurers and the procedures to be used in determining the assessment." While general taxpayers who fund OHIP should be compensated for the health costs associated with automobile collisions, it would be counterproductive to overburden insurers for health cost recovery, the reason being that this cost will only be passed on to the insured through higher premiums; the insurers will not be paying this. In essence, the insureds who reside in Ontario and pay taxes will pay twice for the health services, first, as a taxpayer and, second, as an insured motorist, through higher premiums. According to published reports, the dire prediction of 40% insurance rate increases over five years, as presented by the Insurance Bureau of Canada, had not even factored in insurers reimbursing OHIP for costs related to accidents. If it were factored in as a pass-through to consumers in the form of higher premiums, we are afraid it would only exacerbate the potential instability of rates.
We are strongly opposed to subsections which require an insured person to report an accident to his or her automobile insurer within seven days of the accident. This type of provision has been in municipal statutes. Where, let's say, you went over a pothole and felt the municipality or the city, regional government was at fault because they hadn't kept the roads in proper repair, you had to give a seven-day or, depending upon the level of government, 10-day notice. Those two provisions were struck down by the Court of Appeal as being entirely unfair in terms of timing. The seven days just wasn't considered sufficient. We would feel that perhaps a 30-day time period would be sufficient.
We do support subsection 258.4(2), which states that where an insurer has admitted liability on a claim for income loss, the insurer should make payments to the plaintiff for ongoing income loss incurred pending determination of the amount owing. I think that's very important because that's something in the old tort system we did not have.
CAA Ontario approves of section 26 concerning findings of unfair or deceptive business practices. One of the factors affecting the high cost of premiums is insurance fraud. Insurance fraud is a crime that victimizes all of us who pay premiums. We are therefore pleased to see section 32, which adds three new offences under the act to deter fraud in insurance claims. We ask, however, that the government review the penalties for insurance fraud to determine whether there is adequate deterrence in the system of enforcement.
We have already voiced our concerns about the high cost of premiums and the temptation for some to risk driving without insurance because of these costs. In section 33, which deals with the Compulsory Automobile Insurance Act, we cautiously approve of the increase in fines for driving without insurance. We agree that the fines should be increased. The one thing we don't want to see happen is a fine increase such that courts are more reluctant to convict. That tends to be a propensity of the courts: The higher the penalty is, the more they will be tolerant and not actually register a conviction.
We have a problem with subsection 33(6), which increases the maximum fine for failing to carry an insurance card. Most of us can speak from experience about inadvertent failure to carry an insurance card, either because we've changed wallets or purses or left a wallet behind in a store or on a dressing table. We believe this subsection is too harsh for insured drivers who may have inadvertently travelled without carrying an insurance card, and that's simply the pink slip. The person who is not insured will come under the far more serious penalty of driving without insurance.
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We recognize that the cost of collisions in Ontario is calculated at approximately $9 billion. Insurance only helps after the fact. We ask that the government recognize the many contributing factors to road safety and to contribute in a significant way to the reduction of collisions through improved roads, enhanced police enforcement, safer trucking and efforts to reduce impaired driving.
Thank you for this opportunity to appear before you.
Mr Joseph Spina (Brampton North): Thank you for the elements of your presentation. It agreed with the proposals that are there. I wanted to ask you a question, not as an automobile protection association -- and that's not the right word, I know. I'm a long-time member, so please don't take that as a criticism of the group. But I want to ask you the question really as an insurance broker, which is I think what you are to a certain extent, because you do sell insurance policies through the CAA to your members, do you not?
Ms Newell: CAA Toronto, which is now CAA Central Ontario, has an insurance company, CAA Insurance Co.
Mr Spina: Okay. Then can I still continue to ask the question?
Ms Newell: Sure.
Mr Spina: I'm trying to understand. With regard to subsection 7(5) in here, you indicated, "While...taxpayers who fund OHIP should be compensated for the health costs associated with automobile collisions it would be counterproductive to overburden insurers for health cost recovery." I'm wondering if you were actually preferring that higher-risk drivers who incur damage and injury should not take the responsibility to cover the costs of health care but actually put that burden of those costs on to the health care system, which is what's happening now.
Ms Newell: Speaking here today on behalf of motorists, I would prefer, if that cost were shifted from the taxpayer to the auto industry, that it remain at the auto insurance level and not be passed through to the motorist consumer.
Mr Spina: Yes, I would prefer that as well. I just wanted a clarification because I sort of read into this that you wanted OHIP to cover it.
Ms Newell: No. In terms of the idea of subrogation, up to 1990 when OMPP came into effect, OHIP was subrogated to all tort actions. So we have the precedent well in place, with health care costs being passed through.
Our concern is the stability of premiums. This is a real problem. Just saying simply, "Well, we'll pass through a percentage of the health care costs," won't stop at the insurer paying those costs. It will be passed through to the consumer, to all of us.
Mr Kwinter: Thank you very much for your presentation. I think it's helpful that we actually have a group that represents motorists making a presentation to us.
The only reason that we're here for this next week is because of rates. I can tell you, and I think I'm speaking fairly, that if rates had been stable under OMPP -- maybe they would have changed only because of the next government's real interest in taking a look at government insurance -- this committee would not be addressing this issue. It isn't because people have come to us and said, "You know, the rehabilitation isn't working." That may be the case, but I don't think that would have been enough to trigger the committee sitting. We're sitting because of rates. I think that is the major issue. Everything else is really being used to try to affect those rates and get them down.
The reason I'm just giving that little preamble is that I think it's obvious that if you encourage greater tort, it's almost automatic and a given that that's going to drive rates up. You can't not drive it up, because you're also faced with the potential of a contingency regime in the legal profession and the fact that more and more people are going to get access to the courts, which, just be definition, is going to create more expenses, which are going to be passed through to the premium payer. Do you have any thoughts on that?
Ms Newell: Economic loss: We have always been against that loss of right to sue. I think it becomes more important these days than ever before, because the biggest area of employment is going to come from self-employed people setting up their own businesses, and an income replacement benefit in itself may not save the business. If you're severely injured, sure you get your income replacement benefit, but you may not have people who can actually run the business and the whole business fails. There are really valid reasons for retaining or bringing back the right to sue for economic loss in these conditions.
I agree with you, and given the number of members and non-members who would call us from the beginning of the OMPP system to now, we wouldn't be here other than for rate stability, because members by and large have been pleased with the system. They were very upset with the tort system as it existed prior to OMPP; the threshold was far too restrictive. That was a real problem, and then when the NDP brought in Bill 164 and made more generous accident benefits.
Mr Kwinter: One very brief comment: I have no objection to opening up the tort. All I want to point out is that there's a cost to it. There's a cost to all of these enhancements, and when you consider that the major reason that we're meeting is rate stability -- and, as a matter of fact, the government promised rate reduction -- these are counterproductive in that one affects the other. That was the only point I wanted to make.
Ms Lankin: Just following on that, I guess the more I hear the more I wonder what is the right answer. In going back and looking at some of the submissions before the standing committee that was dealing with Bill 164 in 1993, we heard from the industry at that point in time that the Insurance Bureau's actuarial report that it had commissioned by Wyatt suggested that the rates were going to have to go up on the OMPP product by between 13% and 26%. So we had a couple of years of rate stabilization, when the industry was somewhat pleased with the changes that were made, but as the system adjusted and as people started to make claims under that system, the actuarial reports were saying that rates would have to go up. We have seen increases and projected increases under Bill 164, and we hear claims of fraud. I do remember similar claims under the tort system, but it was under another system.
I'm just wondering if you have stepped back and taken a look at what kind of product is it that the motorist truly wants, and is that affordable under a stable premium scenario. If it isn't, where does the problem lie? Is it in our expectations in terms of the product or is it in the fact that we have some 160-odd insurance companies, all with multiple administrations, duplication of administrations?
Ms Newell: I think what you've had is actually a big pendulum swing with Bill 164. On the one hand, it was too restrictive to consumers under the OMPP group. Then, when Bill 164 came in, the problem was in control and, my understanding is, a lot in terms of fraudulent claims.
This system will change again in the sense that motorists, when you reduce the benefit from $1,000 to $400 and then cause the motorist to have to pay for any increases they want over and above that, along with the funeral benefit etc, they're going to end up paying more for their insurance policy. This is something we've had to really think through. Should it be subsidized by the whole pool, the higher-income earner, therefore have one benefit and leave it at that, or should it really be paid for by the group that will be able to benefit from it if they ever have that need? We agree that group should have to pay for that benefit and therefore will be making probably quite a hefty adjustment in their premium payout, especially the higher-income earner. But that income earner can also pay for it.
Certainly, in terms of looking at a system, fair compensation balanced with stability is critical, and I think even though costs may go up slightly with the ability to sue for economic loss, it should be balanced by the additional costs people are going to have to pay for the higher benefit levels they choose. There should be a balance between the two.
The Chair: Thank you. We appreciate the presentation of the Canadian Automobile Association today.
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CONSUMERS' ASSOCIATION OF CANADA (ONTARIO)
The Chair: If we could move now to the Consumers' Association of Canada, the Ontario section; Ms Helen Anderson. Welcome.
Ms Anderson: I'm going to cut into your lunch hour, I'm afraid. I'll try to be brief. Thank you for allowing me this opportunity.
The Consumers' Association of Canada is a voluntary, not-for-profit, non-governmental association that has been fighting for and winning basic rights and protections for all Canadian consumers since 1947, almost as long as Co-operators has been around.
Since the 1970s, the CAC has represented Ontario motorists in matters relating to automobile insurance. We have made representations before committees of the Legislature, at conferences of the superintendents of insurance, and to every study, task force or inquiry into the subject over this period of over 25 years. All of our briefs stress the importance, if not the absolute necessity, of a no-fault automobile insurance system.
The CAC is disappointed that the current proposal for a new automobile insurance system is discarding the no-fault plan now, in effect, for a combination of tort and no-fault. We feel this is a backward step which will not benefit consumers. The main beneficiaries will be the lawyers. Certainly consumers will lose and premiums probably will not go down.
A return to tort means going back to making an artificial distinction between drivers who are deemed to be not at fault and drivers who are deemed guilty of causing the accident. I don't know whether you've all seen the fault chart, but the fault chart often says that there is 50% at fault, and 75% or 25%. It's very hard sometimes to know who is at fault. In fact, sometimes the not-at-fault driver really is the one who caused the accident. In any case, no one purposely causes an accident. Accidents happen. If they didn't happen, we wouldn't need the insurance companies. Most accidents are the result of inexperience, poor weather conditions, a moment's inattention, slippery roads etc. In its proposal to Mr Sampson in October 1995, Zurich Canada stated: "Most consumers will not have a car accident. In fact, less than 2% of Ontarians will be injured in car accidents every year."
In a tort system, drivers and insurance companies alike hire lawyers to represent their interests in a court case. Litigation is costly, and the acrimony, antagonism and stress involved take a personal toll on everyone involved. An article in the Globe and Mail on February 21, 1991, stated, "Before the introduction of no-fault car insurance in Ontario" -- this was in 1989 -- "more than 30% of claims payments went for legal and court costs -- $500 million in 1989." A no-fault system is designed to look after all parties in an accident without attributing fault. It also frees up considerable funds for rehabilitation and income replacement, not to mention reducing premiums.
Lowering the maximum income replacement benefit to $400 weekly may mean that drivers who have not purchased additional coverage will feel compelled to sue for extra income, if they are not at fault. At-fault drivers will have to settle for the no-fault level of payments unless they have topped up their income entitlements at the cost of an extra premium. Under Bill 164, all benefits were provided for the basic insurance premium. Under the new proposal, consumers must pay additional premiums to obtain the same or, in some cases -- for example, rehabilitation -- fewer benefits than they now receive under the current system.
In fact, we think that very few drives will choose these higher levels of benefits. Additional benefits are a discretionary purchase that requires discretionary income. The average driver will not pay the extra premium up front and may be horrified to discover, upon making a claim, that his benefits could have been enriched. Will brokers find themselves being sued by clients who claim they were not informed of all the options? But of course they'll have errors and omissions insurance to cover themselves for it.
This government has very recently complained that the courts are overloaded. Charges against criminals are being dropped for lack of funding for judges and administration. What will the addition of automobile insurance cases mean to the backlog in the courts? What will be the further effect of lawyers gaining the right to charge contingency fees, if this occurs? We are all familiar with the US stereotype of the "ambulance chaser" who loves to litigate. Can Ontarians afford more litigation?
On February 9 Mr Sampson stated that the insurance industry's confidence in the improved system would enhance competition in the marketplace. He is implying that insurers will reduce their rates. However, in order for there to be real competition in the marketplace, consumers must know what all the companies charge. This is impossible under the current system. Even brokers have access to only a handful of insurance companies -- there are three to six per broker on average -- because of the constraints placed upon their operations. Pity the consumer who tries to find out more than a few prices.
Printed information on rates offered by all companies is not available to consumers. We recommend that the insurers be strongly encouraged to publish their premium schedules on the Internet and that those schedules include the cost of all the extras. Until that day, we urge the Ontario Insurance Commission to continue to publish its guide to auto insurance rates on a regular basis, perhaps expanding the number of companies, cities and risks listed. The guide should be advertised to the public. Very few people know it exists. This guide gives consumers information they need as it demonstrates the advantage of shopping around and points out the vast spread in premium prices between companies.
This new plan of the government contains many good points which I am pleased to point out:
-- Runaway claims for medical and rehab costs will be curtailed and more people encouraged to get back to work, assuming work is available.
-- The catastrophically injured persons -- incidentally, less than 1% of all injured claimants -- will be satisfactorily looked after. All other injured persons -- 99 point something per cent -- will be entitled to medical and rehab services capped at $75,000, a fair level for most, but perhaps not all, claimants.
-- Non-earners, that is, caregivers, students, seniors and housewives, are all given consideration. That's a good thing.
-- Attendant care benefits are at a reasonable level.
-- Death and funeral benefits are realistic.
-- Self-employed persons will be required to state their income in advance in order to establish their entitlement to income replacement.
-- A temporary return to employment is still permitted without affecting entitlement to benefits.
-- Further dispute resolution measures are introduced.
Those are all very good points, Mr Sampson.
Unfortunately, no benefits are indexed for inflation. This will do a grave disservice to long-term disabled persons who will find their benefits gradually eroded as they get older, when their need to purchase care is higher. Indexation does not cost the companies a lot of money, but failure to index will mean difficulties and sacrifices to the permanently disabled.
CAC is pleased to see that insurers may be assessed $100 million for their share of medical and hospital care that accident victims receive through OHIP. We realize that this merely transfers the cost from all taxpayers to car drivers through the insurance system, but CAC is an advocate of the principle that those who do not use a service should not have to pay for it. And there are lots of people who don't drive cars.
Consumers are primarily interested in seeking the best price. Someone else said this, that price was what they were looking for, and that's true. They don't pay as much attention to the cost of accident benefits since few believe they will be in an accident, or in an accident that is their fault. Consumers expect that, having paid insurance premiums for all their driving years, their insurance company will look after their damaged cars and their economic losses. If companies fail to provide these services at a reasonable cost, we recommend that the government look carefully at a government-run, no-fault plan, as in Quebec and Manitoba.
To sum up, the new proposal is a fair compromise between the existing no-fault system and the plan presented by the insurance companies called OMEGA. Even so, we regret it was felt necessary to abandon the search for a pure no-fault, affordable plan. Bill 164 was a complex document, difficult to sort out, hard to administer and fraught with possibilities for overpayment to unworthy claimants. Instead of tightening up Bill 164, and with the very best of intentions, the framers of this new proposal have made the system almost as intricate and, by introducing more tort, made the plan expensive, arbitrary and unfair.
This plan means more costs to consumers, more expense to the insurers, and more money in the hands of the lawyers.
Thank you for this opportunity to speak to you.
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Mr Crozier: Thank you for your attendance this morning. I think you've given a very reasoned description of where you feel the Consumers' Association of Canada is. It's interesting and great to hear from someone who represents consumers.
I don't know whether you were here this morning, but the trial lawyers literally assailed the insurance industry by saying it was deliberately manufactured by a cynical and manipulative industry. They called us cruel legislative bunglers, and yet they propose to represent ordinary people. Now we have another group who represents ordinary people and you're suggesting that there should be some balance between tort -- in other words, you've pointed out that a lot of the tort goes to lawyers' fees and it increases our rates so there should be some sort of balance.
Can you give us some idea of what it is that consumers are willing to give up in the way of tort in order to have reasonable insurance rates?
Ms Anderson: I'm afraid a lot of people have the wrong idea of how valuable the right to sue is. I think we find that coming over from the US, where everybody seems to rush to a lawyer to right all wrongs. It's costly to employ a lawyer. It's very upsetting and, as was stated, it's an aggressive system, it's antagonistic. You get into the hands of the tort system and you've lost control. The lawyers take over and there you are, just a victim really, having to pay the bill at the end, which often is far more than you really thought it was going to be.
Mr Kwinter: I just want to tell you how much I appreciate your message and the fact that the major area of concern for the consumer is the price of their insurance.
Ms Anderson: That's right.
Mr Kwinter: And I think that message has to be repeated over and over and over again. That's why we're here, to deal with the price of insurance.
Ms Anderson: Exactly.
Ms Lankin: I also appreciate your presentation and I want to pick up on the discussion about the maximum income replacement benefit being lowered to $400 weekly. I received a phone call late last night from a gentleman in London who had been watching the hearings, and this is an issue that he felt needed to be raised. I didn't admit this to him at the time, and if he's watching I'll admit it to him now -- I hope I get his story right -- I was asleep when he called and the first couple of minutes I'm not sure I got everything that he explained to me.
He had an accident in late 1990, so it was under OMPP. There was a $600 cap at that time and a very stringent threshold in terms of the right to sue. He has entered into the tort world, and here we are in 1996 and he still hasn't had his court date; it still hasn't been settled. The income replacement cap at $600 at that time -- and you may remember that it was originally proposed to be $450 and through the OMPP hearings it got moved up to $600. Over the period of time, he's lost his house and he's experienced incredible personal financial difficulty for himself and his family.
I think you make an interesting point about more people will be forced, if they think they're not at fault, into the tort system with that low a benefit. Could you just talk to us a bit more about that?
Ms Anderson: I guess we were so much in favour of the pure no-fault system without tort that I haven't really thought that through. We recommended to Mr Sampson, when this bill was being considered, that the level be put up to $600.
Let me tell you why we didn't recommend $1,000 when $1,000 was in Bill 164. I was speaking to a man -- I'll mention his name because I'm sure you all know him: Willy Handler -- in the Ontario Insurance Commission who is an expert on all the rehabilitation and medical and income replacement. He said very few people at $1,000 would use the system because they are people who probably are earning gross around $90,000.
People earning $90,000 are not the average worker. They work for large companies, they work for law firms or they work for the government or something and they usually have accident and sickness plans of their own, in which case they will never use the accident and sickness that's in their car insurance because car insurance is not first payer. Your own plan has to pick up your accident and sickness, then the auto insurance comes in last, so that in effect he felt that people who are earning over $600 or perhaps the $1,000 are subsidizing the others. It was an interesting twist on the whole section.
Ms Lankin: But your position is that $600 is more --
Ms Anderson: We recommended $600, yes. We thought that was a better level.
Ms Lankin: And that $400 will cause difficulties?
Ms Anderson: I don't have access to all the information, of course, the insurance companies have, but I looked at some Statistics Canada figures and they said in one point -- it was 1994 figures -- that the average income earner -- single, actually -- in cities of over 500,000, which would mean Toronto and most of the cities in Ontario, was $29,000 and something. I had an actuary look at the $400 -- that is 85% of your income -- and he gave me a figure of $31,000 as the amount of income that would represent. So really, in effect, it's just a couple of thousand more than the poverty level. I thought that was amazing to discover. I felt that we don't want to see people being reimbursed almost at the poverty level. We'd like to see a decent level, which we thought $600 was.
Mr Douglas B. Ford (Etobicoke-Humber): You've given an excellent presentation here, and I have a question for you. The insurance commission publishes comparative profiles on the cost of auto insurance. What else can be done by government or industry in a cost-effective manner to assist consumers in comparative shopping for the best price and quality in purchasing auto insurance?
Ms Anderson: I think you heard me say that I'd like to see the companies put their schedules on the Internet. Not everybody I know has a computer, or even if they have a computer, are they on the Internet. But it's the coming thing and more and more people will be on the Internet as it comes along.
I think that's the only place that you can provide the enormous amount of statistics that are involved in publishing schedules. I checked with a computer expert, actually, to see whether it was even possible, and he told me that all the airlines publish all their rates for all the cities in the world on a regular basis and constantly update it. I couldn't see how that was very much different from having the schedules of the insurance companies on the Internet.
I also recommend, as you see, that more figures come out of the OIC in their guide because their guide was good. It had six profiles in quite a few cities which was more than before, but it still only handled about 25 or 30 companies and there are well over 130 companies doing business here in Ontario. So I thought that the only answer is the Internet.
Mr Ford: The Internet is fine, but you wouldn't be covering the major portion of the population.
Ms Anderson: Not yet, no. But I don't imagine the companies are ready to do it tomorrow anyway.
Mr Ford: Yes. What other suggestions would you have?
Ms Anderson: The guide.
Mr Ford: Just the guide?
Ms Anderson: I think the guide to insurance, yes.
The Chair: Thank you very much, Ms Anderson, and we thank the Consumers' Association of Canada for their presentation today.
Ms Anderson: I want to apologize for the fact that our submission was on double sides, but we did that to save paper.
The Chair: Thank you very much. We'll stand in recess until 1:20 pm.
The committee recessed from 1209 to 1323.
The Chair: If we could call the meeting to order. There is a meeting of the government going on, but they'll be in momentarily.
CANADIAN PARAPLEGIC ASSOCIATION ONTARIO
The Chair: We have with us the Canadian Paraplegic Association Ontario, Michele Meehan. Welcome.
Ms Michele Meehan: Thank you. I am the director of rehabilitation services for the Canadian Paraplegic Association Ontario. The Canadian Paraplegic Association is a non-profit association that has provided rehabilitation services, support and information to people with mobility impairments for over 50 years. CPA Ontario provides service to over 4,000 people in the province. Our funding comes from the provincial government, charitable donations and fees charged to auto insurers.
Every year there are approximately 350 new spinal cord injuries. About half of these are due to auto accidents, so we're talking about a relatively small number of people who are affected, but the severity of the injuries sustained are among the most severe in terms of auto-related injuries. The survivors of these accidents require long-term, intensive services that are costly and therefore of great concern to insurers. We really believe it's important that the insurance industry be in a position to respond to their needs quickly and effectively in order to maximize individuals' independence and productivity while minimizing the costs.
CPA Ontario fully supports the goals of the current government in providing basic coverage, keeping insurance costs down, making insurance affordable and avoiding shifting costs to the public sector. We believe that insurance premiums should be used to pay for the consequences of auto accidents. We hope this can be accomplished without compromising the legitimate needs of people who sustain severe permanent impairments and require significant assistance in their rehabilitation.
We are very pleased to see that the proposed legislation treats people with catastrophic injuries as a distinct group who have greater access to medical rehabilitation and attendant service benefits. We're also pleased to see that the benefits continue to be available to address the comprehensive range of needs that people experience after such injuries, including the social, vocational and psychological.
There are four areas that we have some concern with that I will address in order. They are: the dollar limit proposed on attendant service benefits; the proposed definition of "catastrophic impairment"; the requirement of signed treatment plans signed by health professionals before rehabilitation benefits are provided; and the link between the attendant service benefits and the housekeeping and home maintenance benefits.
The proposed legislation indicates a maximum attendant service benefit of $1 million, with a monthly maximum of $6,000, unless an individual has had the foresight to purchase additional optional coverage. This system would in some cases penalize the most severely injured individuals and would end up passing on costs to the overburdened public system. This would end up years from now in inappropriate living situations for individuals, such as nursing homes and chronic care facilities, once their benefits have expired. Not only would these situations limit the productivity and independence of the person with the injury, they would drive up the overall cost of support to this individual. Passing the costs on to the public system doesn't help the auto insurance premium payer who is also a taxpayer.
For people with severe permanent disabilities, the need for attendant services doesn't disappear or decrease over time. In fact, as people age, their need for personal assistance is likely to increase. Attendant services are crucial for the survival of the people who rely on them. They're not optional. They're not a luxury. Attendant services have to be maintained in order for an individual to accomplish any other rehabilitation goal such as employment or participation in the community. The one that's outlined in the proposed legislation could work as a disincentive for people to participate in vocational retraining and social rehabilitation if they're concerned that their attendant benefits are going to expire and they're going to be warehoused in a chronic care facility.
We believe that the benefit must be granted based on a legitimate need, not whether the person had the foresight or lack of foresight to purchase an optional benefit. When we make decisions about purchasing auto insurance, each person assesses the probability of needing extensive coverage, extensive benefits, and the probability is quite low, but for the people who do sustain these severe injuries, the need for the service is huge.
For these reasons, we believe this benefit should not have a cap on the dollar amount over a person's lifetime. We also believe the monthly limit in the current legislation of $10,000 is more reasonable for those few individuals with a high level of disability, such as those with a high spinal cord lesion or a combined spinal cord and head injury. While this will increase costs for some individual cases, we believe the number of people who would require services above and beyond the proposed limits is quite small and it would not impose a burden on the insurance industry. It is imperative that the insurance industry understand the essential nature of this service and that it is prerequisite for every other rehabilitation goal.
I'd like to address the definition of "catastrophic impairment." We have some concern with this. As it reads now, an individual must have a specific diagnostic label to fall under to meet the threshold for catastrophic. These labels are really useful for helping to facilitate communication, particularly between health care professionals, but they don't give us much information at all about an individual's functional abilities. We're really concerned about the potential for differences in interpretation of these labels that would unduly restrict the qualification for medical rehabilitation and attendant service benefits. For example, it's not clear whether the terms "quadriplegia" and "paraplegia" would be applied with regard to an individual's functional mobility, or whether such a description would be used in a restrictive clinical manner.
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Let me give you a couple of examples that will make this more clear. When a person has a spinal cord injury, sometimes it's possible that just a portion of the spinal cord is damaged. So there is still communication between, for instance, the legs and the brain. They may end up with some functional use of their legs but still have the label "paraplegia." Alternatively, if somebody has a severe orthopaedic injury, they may need a wheelchair for mobility but they clearly don't have paraplegia. Their needs in terms of use of a wheelchair, accessible living environment, adapted work area, are exactly the same. So we would strongly suggest that this definition be amended to include a reference to their residual functional abilities to more accurately reflect the spirit that's intended here.
The third thing I would like to address is the need for treatment plans. We're pleased to see that treatment plans are required prior to the provision of service. We hope this helps to eliminate some of the unnecessary and costly services that fail to promote rehabilitation goals. These plans are a very valuable tool for articulating rehabilitation goals and ensuring that the insurer, the service provider and the injured individual have a common understanding.
We would like to ask that the legislation clearly state that professionals submit plans specific to their area of expertise. Over the last several years, we've seen advances in rehabilitation, research and technology that have led to diversification and specialization of related professions. We've come a long way and I think made great progress from times when physicians made every recommendation, from the requirements for home renovations to vocational aptitude testing. We're fortunate now that we can work as a team and bring a greater depth of knowledge than any single profession could hope to provide. We'd like to see the legislation respectfully support the diversity that exists in rehabilitation professionals and the expertise that each brings.
In keeping with this, this definition of a rehabilitation plan fails to allow for the rehabilitation plan generally written by a case manager. Many case managers are not regulated health professionals. This kind of written plan, though, articulates the long-term rehabilitation goals, integrating the medical, psychosocial and vocational aspects of functioning, and it's a really important element in ensuring successful completion of the entire rehabilitation process. We would hope that the committee would specifically include reference to rehabilitation plans as written by case managers in the legislation.
We're well aware that many insurers have well-founded concerns about the quality and the cost of case management services and, in the present market, we share many of those concerns. However, we know that there are good-quality case managers, and when that service is provided properly, it's very valuable in advancing the rehabilitation goals and maximizing an individual's productivity and independence, and keeps costs down over the long term. The services of qualified individuals should be recognized and included in the delivery of services to people with injuries.
The last point I would like to address is the housekeeping and home maintenance benefits. Under the proposed legislation, a person with a catastrophic impairment qualifies for ongoing housekeeping and home maintenance benefits only if he or she also qualifies for the attendant service benefit. However, there are individuals who are able to independently manage all self-care activities but require a great deal of assistance with the larger housekeeping and home maintenance activities. We would suggest that these benefits be available independently of the attendant service benefit upon assessed need for them.
It also indicates in this proposed legislation that in assessing the need or the benefit of housekeeping and home maintenance, an individual's usual role is considered. We would suggest that an individual's developmental stage also be considered in this, as well as the potential for a change in circumstances. For example, a person injured when they are a child would not be expected to be taking on housekeeping and home maintenance. However, if the disability is permanent, that role would become appropriate for them as they reach adulthood. Similarly, in many families following a serious disability divorce occurs, and of course sometimes spouses die, and it's important that people have access to this benefit should their circumstances change.
Just in closing, I'd like to say we recognize the complexity of trying to balance the need of policyholders, insurers, people injured in accidents and rehabilitationists and we appreciate the apparent effort that's gone into this.
We appreciate the opportunity to address the committee today and hope that our recommendations will be considered. I'd be glad to answer any questions.
Ms Lankin: I truly appreciate your presentation. I think you've made some very good points about attendant care and the nature of those services and the few people who will require something that will go beyond the $6,000 cap, and also the separation of housekeeping from attendant care and the developmental level change considerations, because they're all very important points.
I wanted to ask you a little bit about the definition of "catastrophic impairment." We've heard from some different groups, particularly people who are involved with the brain-injured, who said that the Glasgow coma scale, for example, is not appropriate; it has to be the Glasgow outcome scale, looking at functions.
How would you see that reflected in the legislation? You say, "Include a reference to residual functional abilities," but there needs to be, in different types of impairment, different ways of judging that functional ability and the outcomes. Could you talk about what's in place out there for assessment?
Ms Meehan: Sure. It's a difficult question, there's no doubt about it, and each kind of injury is going to result in some different problems, but that's exactly why I suggest the need for a functional outcome. You need to look at the individual's ability to carry out particular tasks that are essential to everyday living. Some of those might be things like work, leisure activities, self-care, driving, and there's going to be all different reasons that people can or can't accomplish those tasks, but the functional outcome looks at whether it's actually done or it's not done, as opposed to the reason why.
Ms Lankin: Is there an easy way to put that into words for the government to instruct the industry to follow?
Ms Meehan: Not an easy way, I would have to say. No, there is not. It really would require individual assessment and looking at specific tasks that would be considered essential, and that would need consultation from groups like our organization as well as groups that represent other disabilities.
Mr Sampson: Thank you for your presentation. We indeed struggled with the definition of the phrase "catastrophic impairment," and that's why we chose to try to add that catch-all section, section (f), under the definition of "catastrophic impairment" that says, "any other impairment or combination of impairments similar in severity to the impairments described" above. It was an attempt to say you can't really pigeonhole everything. If we've missed something, maybe there's some catch-all component.
We've heard some presentations from the industry saying, "Well, that's so broad you could drive a truck through it," I think is what they'd like to say but they didn't quite say.
Mr Crozier: Your own people said that.
Mr Sampson: Some people have said that, yes.
I wonder whether you could give us some help as to how we can further define that one, because that's the real struggling point.
Ms Meehan: I would say again I would look at identifying key functions of daily living. There's a tool called a functional assessment inventory that attempts to do that. Another criterion that you might look at is whether the person's able to accomplish something independently. Do they require an assistive device or the help of another person for mobility, for self-care, for driving, or are they able to do that without those things?
Mr Sampson: Is there any research that you can direct us to that would help us to further define that?
Ms Meehan: I certainly could find some references. I can't think of anything off the top of my head, but I'd be glad to do that.
Mr Kwinter: In your brief, you call for recognition of rehabilitation plans written by case managers. Yesterday we had a member of the legal profession who spends all of his time dealing with insurance claims at the Ontario Insurance Commission. He was quite animated in his presentation, and one of the things that he said was that case managers just make telephone calls. He said, "Why are you in any way supporting case management? All they do is make phone calls, and surely we don't have to pay somebody to make telephone calls." I'd be interested in your reaction to that statement and if you could give us an idea of how you see the role of the case manager.
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Ms Meehan: A good case manager does a lot more than make telephone calls. I am well aware that there are case managers who do little more than that, or pass along reports between professionals. A good case manager helps a person to articulate their long-term life goals, again in a functional way.
What tends to happen without good-quality case management is a variety of treatments that aren't well coordinated. I've heard people say: "Well, I keep going to physio, but I don't understand why. What's the point? What's it going to lead to in the long term?"
We're working to get people back to work, back into their homes, back into their communities, functioning as members of their family, and a good case manager will help the person identify those goals, first of all, because most people don't think about what it is they want to accomplish in their daily life. We get up, we go to work, we go home to our families; it's very simple. But when you have a serious injury, it becomes much less simple.
So articulating the goals is the first thing, and then making sure that all of the service providers that are involved are working towards those goals and supporting that with the individual. If the service providers aren't talking to each other or coordinating through a central thing, I've seen people working towards opposite kinds of goals, and the individual loses out. It becomes very expensive, it takes a lot longer, everybody's confused and the plan breaks down. Each service provider might come under attack for not providing a good-quality service when they may be. It's just not coordinated. Does that help?
Mr Kwinter: Sure.
The Chair: Thank you, Ms Meehan, for presenting to us and sharing the Canadian Paraplegic Association's thoughts with the committee.
COUNTY OF YORK LAW ASSOCIATION
The Chair: Is the chain litigations section of the county of York, Michael Shannon --
Mr Michael Shannon: It's the County of York Law Association.
The Chair: Please, if we can move you up 20 minutes, that would be very helpful.
Mr Shannon: That's fine.
The Chair: And it is the County of York Law Association. We have your presentation. You'd like to make a presentation, and we have 20 minutes.
Mr Shannon: I want to thank the committee for allowing me to appear here this afternoon on behalf of the County of York Law Association. We are an organization of 4,000 members, lawyers who practise within Metropolitan Toronto. I also personally act for injured victims of other persons' negligence and have done so through the past three insurance schemes.
The theme that I've often found in the last five and a half years is one of frustration. Clients come into my office and they're frustrated. I think this is a good opportunity for the government to correct the problems of the past two insurance schemes, namely, OMPP and Bill 164. It's an opportunity to implement a system which is respected and not ridiculed, and it's an opportunity to say to innocent victims of others' negligence, "We care, we respect you and you have rights."
As I indicated earlier, over the past five and a half years I've had people come in who are injured and are frustrated because I've had the unfortunate circumstance of having to tell them, "I'm sorry, your injuries are not serious enough to either meet the threshold, or financially it would not be in your best interests to pursue a claim."
The purported client often says: "Well, what's the use in having auto insurance? If I've got coverage through my work for income loss and if I've got coverage through my work for medical benefits and I can't sue, why am I paying $1,500 a year for this?" I lift my hands in the air and I say, "I'm sorry, I can't give you an explanation that's obviously going to convince you."
They're frustrated. I'm seeing more people recently who are appearing in my office who were driving without insurance. There's that frustration that has filtered down and people are saying, "I'm going to take my chances." There's the frustration of the people who say, "Listen, if I'm injured and I can't do anything about it, why shouldn't I just go and run that person over?" There's a real frustration that a lot of people can't understand and deal with.
I became a lawyer, and especially in this area, to help people. That's what I wanted to do. I couldn't stand the sight of blood so I couldn't become a doctor, so I thought, "At least I can do something to help people." As a lawyer, and as a husband whose wife has suffered what I guess would be classified as a minor injury which has been ongoing for the last four years to the cervical spine -- she lost time from work and is in constant pain -- I'm frustrated also. It's a frustrating system because it's unfair.
The issues or problems I wanted to deal with this afternoon are primarily with respect to the $15,000 deductible, fatal accident claims and the lack of provision for a loss of support or dependency and the areas dealing with income loss. And if there's time at the end, then perhaps I could briefly comment on the notice provisions with respect to the tort and accident benefits.
The $15,000 threshold also has a verbal threshold which is proposed to stop people from bringing claims. With the $15,000 threshold, it sets up two barriers for people to try and cross. Now, I'm not a supporter of a verbal or a financial threshold, but I realize that if we're going to make a system in this province that's affordable and fair, there's going to have to be some compromises. The difficulty I have is that a $10,000 deductible under Bill 164 was already, in my respectful submission, too high. Now there's a proposed $15,000 deductible.
If I could give you a couple of examples, it may help you in understanding where I'm coming from. If I'm a person who has suffered an injury to their cervical spine, I've suffered ripped muscles or ligaments, I've got pain every day, it interferes with my ability to work, it interferes with my ability to participate in my recreational activities, I'm required to take medication, I have to see my physiotherapist on a weekly basis, I have to go see my family physician on a monthly basis -- and this has been ongoing for three to four years. I finally get a prognosis from the doctor and he or she says to me, "Sorry, Mr Shannon, but your problems are chronic and they're not going to go away."
A court would assess an injury such as described in the range of $15,000 to $25,000 for pain and suffering. Under Bill 164, with the $10,000 deductible, if you were to get to the high end of the range, it may be something you would contemplate pursuing. However, under the $15,000 proposal, if you did a cost-benefit analysis, it really doesn't make a lot of sense to bring a claim for $15,000 to $25,000 when right off the top $15,000 is going to disappear, because you may incur costs of $5,000 to $15,000 to recover it. It just doesn't make a lot of sense and I have to, unfortunately, discourage people who come in and tell me about those injuries.
Another example of an injury where people are becoming frustrated is a fractured arm requiring an open reduction. They've had surgery after the accident. Hardware has been put in to stabilize the injury. They require further surgery to remove the hardware. They are left with an unsightly scar. The person has limited range of motion, pain and stiffness. It interferes with their ability to work and recreate. A court, in a situation like that, is going to award something in the neighbourhood of $20,000 to $25,000 for pain and suffering. Once again, it's not a case that is likely to be pursued with a $15,000 deductible.
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Let's go to a further extreme. You have a fractured tibia and fibula: daily pain, medication is required, physiotherapy. It's a weight-bearing joint. There's a 10% to 15% chance of developing osteoarthritis. A court is going to award someone with those problems $25,000 to $30,000. This is a borderline case as to whether you are going to pursue it with the $15,000 deductible.
The last example, and one I'm often hearing from people, is the mild head injury and the person who shows some cognitive deficits, but where there's no real objective evidence to support the mild head injury. The MRI doesn't show there's a problem there. Insurers, frankly, are fairly sceptical, and they say, "This is the whiplash injury of the 1990s." They're saying, "There's no proof and I don't believe it."
The problem is that we're just learning about these injuries, and just because an MRI doesn't pick up this injury doesn't mean there isn't a problem there. We may not have the technology at this point to pick up those injuries. I like to use the analogy of the Hubble telescope. Before the Hubble telescope was developed, we weren't aware of the universe out there, other than what we could see with our regular telescopes. Now we're aware there's something out there beyond. There's probably a technology that in the next few years is going to come out and develop and make us realize that, Jeez, these people have mild head injuries, there is some objective evidence, and those complaints of memory problems or they're "just not the same" are legitimate.
A court, hearing this evidence, will probably say: "What's it worth? It's worth anywhere from zero to $50,000." How many people, with expert costs in proving this type of injury, are going to want to risk going to try the case for a $15,000 deductible, spending $15,000 possibly in expert reports and collecting a maximum of $30,000 or $35,000 after the deductible?
What we're proposing or what we would like to see would be a deductible that is a lower level, and $7,500 is something that we would like to recommend.
The second problem or issue I wanted to deal with today was the fatal accident claims and loss of support and dependency. I understand possibly this has been dealt with already and that there may be a reason it wasn't in the draft legislation. But I just want to raise the fact that there's no provision for loss of dependency and support in fatal accidents.
An example is a breadwinner who is fatally injured and is earning $50,000 at the time of the accident. The spouse is a homemaker who is looking after two infants. The loss to that family is obviously going to be catastrophic emotionally, but also financially, because that person is going to have to stay at home with the infants. She or he may not be trained to go out and earn a living equivalent to what the breadwinner was, and they may be forced on to welfare or some sort of social assistance.
The third issue or problem I want to deal with this afternoon is with respect to past and future income loss. I understand the proposal is to allow people to sue for 85% of their net income loss and all I can say is that in most circumstances this is not going to be fair.
An example would be if we had a young person who had just entered the workforce, is seriously injured and unable to work ever again, and that person's current earnings don't really reflect their potential, they haven't met their prime earning capacity. This person is going to be pigeonholed into an area which clearly is not fair if it's an 85% net future loss of income based on what they were earning at the time of the accident.
An even unfairer example would be a high school student who intends to go on to university, is injured and can't, for whatever reason, go on to university and can't work. How are we going to measure their net loss of income? I can't figure out a way where I can imagine somebody receiving fair and reasonable compensation for their losses in the future in that situation.
Not only are persons who are injured and unable to work in the future not being treated fairly, but people who have been injured but are forced to either switch their focus or careers, are not going to be treated fairly under this proposed legislation. If I can give you an example, perhaps it's a young person who is interested in becoming a member of provincial Parliament and they lose their voice and they're unable to talk and instead go on to become a caretaker or something else like that. They're not going to be fairly compensated. They're going to suffer a future diminution of income.
The proposed legislation has got to speak to diminution of income and ability to earn income in the future. We propose that 100% net loss of income be allowed, 100% gross future loss of income be allowed, because the courts have a tendency to reduce future loss of income claims for negative contingencies and reductions of 20% to 30% are common. That will also pick up any sort of future income losses as a result of a person not being able to move up the financial ladder in their business or occupation. What we're proposing is claims for future diminution of income also and loss of competitive advantage.
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Mr Spina: Mr Shannon, thank you for subbing at the last minute a bit ahead of time. Just quickly, it really keys in on the last point that you indicated, and that was the amount of the future diminution of income. I like these nice legal terms so I like to get my tongue around it, but not too often. I'll leave it to lawyers like Mr Kormos.
What we're talking about is not just the ability to -- the loss of income when you have a specific occupation or career direction, but you're also looking at the loss of the competitiveness or the ability to be able to create that career. My problem is that I can appreciate it's unfair that perhaps you have a high school student who's a bright kid, maybe athletic and is now injured, but there really is no clear-cut direction. In grade 9, my daughter said she wanted to be a doctor, but that doesn't mean she ever will be.
I'm having difficulty grasping how far that would go because obviously one of the big concerns we have is the stability of premiums to the consumer, and what we're looking at here is perhaps more tort and more compensation for the victim.
Mr Shannon: I agree with you. That is a concept that has given not only lawyers but judges difficulty in grasping. All I can say is that the courts will look at a number of things when determining if somebody has suffered a loss of competitive advantage or future diminution of income.
Using your example of your daughter who's a grade 9 student, they'll look at what her marks are like in the previous years. They'll look at what are her siblings doing with their lives. Are they going on to university or have they dropped out in grade 10? They'll also look at what the parents have done. It's not fair, but it's something that is considered by the courts and they do their best to be fair and reasonable.
They take a number of things into consideration, but obviously no one has a crystal ball and no one is going to be able to tell you that your daughter is going to become a surgeon and rather she becomes something else. It is a very difficult thing to do and the courts seem to be handling it, but they're very careful when they deal with it.
Mr Kwinter: Yesterday one of your colleagues appeared before us and made the same point about 100% reimbursement on income and suggested the way to fund it -- it would be neutral -- would be to extend the one week of non-payment after an accident to two weeks, as it's covered under the Workers' Compensation Board. Do you have a reaction to that?
Mr Shannon: I don't think I can comment on that because I'm not sure whether that would be satisfactory or it would be paying them too much. I'm not sure because I don't have an opportunity to look at the figures, so I'm not sure what an actuary would say as far as if that's going to make a difference.
Mr Kwinter: Right now you're recommending that it be 100%.
Mr Shannon: What I'm recommending at this point is 85% for net loss of income up to the date of trial. In the future, I'm recommending 100% loss of income for gross loss, which is generally reduced by courts 20% to 30% for negative contingencies.
Mr Kormos: I'll use no more time than Mr Spina did. Mr Spina should know, he's quite right, I'm a lawyer. I'm not a personal injury lawyer, though. I was a criminal lawyer, which is probably far more suitable if you're going to enter politics in this province.
Mr Sampson: Or be a leader of one of the parties.
Mr Kormos: I'm going to use as much time as Mr Spina. Mr Shannon, the one illustration -- and again, I don't want to be overly critical, but referring to a person who no longer spoke being unable to assume a position in Parliament, Gary Malkowski of course sat in this Parliament for five years, deaf and speechless, but he communicated by signing. Please revise that one in future submissions because I think it doesn't address the issue fairly.
Mr Shannon: Okay.
Mr Kormos: Look, we haven't received any actuarial information on what these changes are going to save or indeed what they're going to cost. The fact is that when you look at the so-called tort here, the income replacement tort, 85% of net above the cap of $400, really isn't all that is, is simply no-fault benefits in yet another name?
How can the government talk about restoring tort -- I know they want to keep a promise, among many, that they made in their so-called revolutionary blue book, but when you're talking about so-called tort for economic loss being restricted to 85% of net that is based on the income of that person at the time of injury, really isn't that nothing more -- because the number is remarkably identical to the 85% of net being the no-fault income replacement. How is that any meaningful restoration of tort rights when we're looking at it in the context of this so-called package?
Mr Shannon: I'm not sure whether it is a reasonable restoration of tort rights. I think a past loss of income of 85% for net loss of income and a future loss of income of 85% is not reasonable in many circumstances.
Mr Kormos: A whole lot of folks think it's a broken promise. Do you?
The Vice-Chair: Thank you, Mr Kormos. That's the time we have. Mr Shannon, on behalf of the standing committee, thank you very much for your presentation today. Have a good day.
MARVIN BLAHA
The Chair: The next delegation before the committee is Marvin Blaha. Good afternoon and welcome.
Mr Marvin Blaha: Thank you. I apologize to everybody for being late. I got tied up in a little bit of traffic.
The Vice-Chair: Yes, we stepped back to the 1:40. I'm glad that you're here. You'll have 20 minutes.
Mr Blaha: I won't take that long. First of all, I'd just like to tell you a little bit about myself. My name is Marvin Blaha. I live in Orangeville. I'm married. I have four children. My wife drives and I drive. I decided yesterday to come here today, I phoned and I was fortunate enough to find a spot. I'm here because as a member of the public I'm angry.
My insurance went up $387 this year from last year. We have not been involved in any accidents. Our driving records are clean, with no convictions or even any charges. I would like to know basically where the insurance people can increase my insurance by $387, convicting me for other people's errors.
I'll go a little bit further. I used to be a policeman, in 1988 I quit the police force and I opened up a business. I defend people in court for traffic tickets. I would say about 20% of the persons who come into my office are charged with driving with no insurance and making a false statement to the ministry. Making a false statement to the ministry, I don't know if you're aware of that; it's when you go to get your validation sticker and you put down your policy number and then you sign your name.
I went to get my insurance in August. They didn't even ask me if I had proof of insurance there. I just put a number down, et voilà, I got my sticker. This is one way, stopping it at the ministry, that you can stop people from driving without insurance.
I heard my friend here before me indicate that the reason people are driving with no insurance is because they're frustrated. No, they're not frustrated. I would say the average persons who come into my office who are charged with "drive, no insurance" are working people. They can't afford to pay $2,000, $1,600, $3,000 a year. It's just impossible for them to do it. What happens? They get involved in an accident. The people who are in the car basically make claims. They know there's a buck to be made out there. It's us who have a clear driving record who are forced to pay for these people. Something has to be done about it.
I would like to say something about the accident reporting centres in Metropolitan Toronto. What happens now is when somebody's involved in an accident, a property damage accident, they phone the police to come to the scene and they are told to go to an accident reporting centre.
I'd like to give you a scenario. Two people are driving along the street. Mr A makes a lane change and hits Mr B. Mr B calls the police and the police tell him they have 48 hours to go to the accident reporting centre. In the meantime, during that 48 hours, Mr A has time to talk to his friends, and his friends tell him, "If you go down there and say you made a lane change, you're going to be at fault and your insurance is going up." Mr B goes down to the reporting centre and tells them the truth. Mr A goes down to the reporting centre and says, "No, I didn't make a lane change; Mr B made a lane change into me." I ask you, whose insurance goes up? From what I understand and from the complaints into my office, both parties' insurance goes up because they are found 50-50 liability with the insurance companies. Why is the innocent person charged with the accident?
Basically, in a nutshell, I'm just frustrated and that's why I'm here. I'm fed up with the insurance rates; I'm fed up with the insurance companies saying they're not making a buck. If they're not making a buck, why do the banks want to get into it? That's all I have to say.
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Mr Crozier: Thank you, sir. I wanted to ask a question and I think it's one that can be asked of insurance companies, lawyers, anybody who comes before us. This isn't a trick question, but what would you consider an affordable premium for the average driver?
Mr Blaha: An affordable premium for the average driver who's never been in trouble, with a clean record, never had any at-fault accidents -- I would be happy to pay $750 a year, $1,000 a year, but $1,800 --
Mr Crozier: But you pay more than that. I had hoped actually that you would say you don't know, and that's what we're trying to get at. We're trying to find out -- because rates are at the bottom of this, there's no question. The government's not happy with the rates that are being predicted, the rate increases that are being predicted. The public I think perceives, as you do, that insurance rates are too high. They want to see a reduction in them, and I assume that's what you'd like to see. That's why we're here, because of the rate question, not necessarily because of the at-fault and all this kind of stuff. "If my rates are okay, I'll take what comes to me."
Mr Blaha: Just to be honest with you, sir, if I answered, "I don't know," then you wouldn't know.
Mr Crozier: That's right.
Mr Blaha: This is what I can afford and what I feel is reasonably fair.
Mr Crozier: If that's the case and we have bad drivers, who should pay then? Should the bad drivers pay?
Mr Blaha: The bad drivers should pay.
Mr Crozier: Yes. If that's a working person, and it works out that that premium is $3,000, you're telling me they can't pay that.
Mr Blaha: That's correct.
Mr Crozier: You see. So that's the dilemma we're in.
Mr Blaha: Here's the dilemma. If one of these bad persons who have no insurance should go each year to the ministry, all the clerk at the ministry would have to say is, "Let me see proof of insurance." That's all they would have to say -- no proof, no tag. What would happen then is, this person would be driving around with an expired validation sticker. I can tell you, from being a policeman, that I always kept an eye out for expired validation stickers because that was an easy tick on my record, and nine times out of 10 they wouldn't go to court. That's the way of stopping it, sir. When one comes to court for "no insurance," they should make the penalties a little bit stiffer. The average penalty out there today, I would say, 90% of the time is a $500 fine.
Ms Lankin: You now represent drivers in court, so you have a perspective on this that might be helpful to us. I asked some of the insurance company representatives who were these good drivers who we going to get discounted rates, and we've not been able to get any kind of a definition from them about what a good driver is. Most of us think we are good drivers, but if you've ever had a speeding ticket, according to the insurance industry you're not a good driver. If there's ever been any kind of infraction you're not a good driver. I don't know if you have a sense in terms of the vast majority of the driving public. Would they qualify as never having had any indication on their driving record of any problem? If that's what the insurance industry suggests is a good driver, are many people going to see any reduction in their rates?
Mr Blaha: Problem drivers can be identified by their records. But let's face it, each and every one of us here today speeds. We have just not been fortunate enough or unfortunate enough to be caught. I don't see the answer to that. But as far as I'm concerned, a bad driver is somebody who comes into my office and has a long record, not just one conviction. I mean, one conviction is nothing, really. Everybody speeds. I would be lying to you here today if I told you that I didn't speed coming up here to make it on time.
Ms Lankin: I think you would find the insurance industry would say, "You're not a good driver then and you're not going to get the benefit of rate reductions," according to the industry.
Mr Blaha: According to the industry, all they have to look at is your record. If it was left to the ministry, then everybody would be a bad driver. I would say that everybody in this room at one time in their life has broken the speed limit. Does that make us all bad drivers?
Mr Kormos: One of the interesting observations: You made reference to basically insurance fraud, and that is people who use either counterfeit pink slips or don't have any at all.
Mr Blaha: That's correct.
Mr Kormos: The fact is that pink slips are coming from some insurance broker's office, because nobody's sitting down there with a photocopier running them off. But it remains that, wouldn't a system that insured and regarded the driver and the history of the driver as well as the vehicle, because there's some schizophrenia in the way insurance gets assessed here -- there are a whole lot of licensed drivers who don't own vehicles. These people are on the road driving any number of vehicles but don't pay premiums. Isn't that a fair observation?
Mr Blaha: That's a good observation.
Mr Kormos: Wouldn't a system that insures drivers based on their personal records, vehicle owners based on the vehicle's record, and that ensures that you don't get a sticker or a validation tag until your insurance has been paid up in full be a far superior system to what we're experiencing in this province now?
Mr Blaha: Bang on.
Mr Kormos: Come back tomorrow at 1:20, when I make my presentation to the committee.
Mr Blaha: Can I pick up my cheque tomorrow?
Mr Sampson: I look forward to that presentation as well, Mr Kormos.
Mr Kormos: I hope you're going to be here, Mr PA.
Mr Sampson: Oh, I'll be here.
First of all, I wouldn't judge what the banks get into, by the way, as an indication of good business. I've spent some time in banks. I can tell you that they've made a few mistakes in their past, as well.
I want to talk about the uninsured driver issue because that's a bit of an item I think we need to seriously address, and we will. The number I heard through our initial consultation process, of people driving without insurance, was that it could be anywhere up to 20% of the insured vehicles in this province. If you work through the numbers, by the way, that's a significant amount of premium dollar that's not being paid and it's basically being spread over the people who are paying it.
I agree with you that the mechanism now at the MTO offices doesn't necessarily deal appropriately with the insurance and the plate sticker issue. We're looking at ways in which we can encourage the industry perhaps to provide live data to the MTO so that they don't have to ask the question; they know the answer when you come up to the wicket.
The dilemma is, though, that we're now issuing two-year licences, and some people are paying their insurance on a monthly basis. That's how the pink slips get out. So we're going to have to try to find a way to deal with that. But I think I hear you saying if we can try to catch these people or deter them from getting plates, we'll have gone a long to encourage them to pay the rates that they're avoiding and that are being passed on to other people. Is that the message I'm hearing from you?
Mr Blaha: The way I look at it, it would either force them to pay the rates or not have a licence at all.
Mr Sampson: Right. Do you have any problems with the last part, not having a licence at all?
Mr Blaha: I don't have a problem with that at all. If they can't afford to drive responsibly, then they shouldn't have a licence, but I think the onus is on you people here to make it affordable for the average Joe out there, for the poor guy who's making minimum wage who has to use his car to get back and forth to work.
Mr Sampson: I agree with you, but should those individuals get into the bad driving category because of their driving habits, they won't be able to afford it, so therefore they can't drive. Is that what you're saying?
Mr Blaha: If they're bad drivers, they shouldn't have a licence. That's my opinion. To be honest with you, my business is thriving because of the rates people pay for insurance, and I would like to see insurance rates come down. If the insurance people were fair, perhaps I would be out of business, to be honest with you.
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The Vice-Chair: Thank you, Mr Blaha, for a very candid discussion today. Be careful driving home.
PEOPLE AGAINST THE INSURANCE NIGHTMARE
The Vice-Chair: The next group to appear before the standing committee today is PAIN, People Against the Insurance Nightmare, I believe William Morris, Dr Kenneth Burgess and the return to politics of Renee Levesque.
Ms Renee Levesque: From referendum to rehabilitation.
Mr William Morris: As chairman of our proceeding here today, my name is William Morris. With me is Ms Renee Levesque, a rehabilitation counsellor, and Dr Kenneth Burgess. Our order of presentation will be Renee first, Ken next and then myself. We hope to confine our remarks to 10 or 11 minutes to leave enough time for questions, if possible.
Ms Levesque: We recognize that rehabilitation costs to the insurer need to be controlled, and we appreciate in theory the procedures for claiming medical and rehabilitation benefits, as outlined in the accident benefits draft bill. We also recognize that many accident victims are able to resume employment and/or their normal activities after 15 sessions or six weeks of physiotherapy or chiropractic treatment, and for these insured persons, the procedure for receiving treatment benefits appears reasonable.
However, there are many accident victims for whom 15 sessions or six weeks of physiotherapy or chiropractic treatment are not sufficient, and many who require other forms of treatment instead, if they are to achieve or attempt to achieve their pre-accident status. There are also those who suffer catastrophic injuries for whom the rehabilitation process is much more involved, and this process generally requires many evolving treatment steps. For all of these accident victims, we have concerns with respect to the procedure for receiving medical and rehabilitation benefits.
From our reading of the draft bill, it appears an insured person could conceivably be without necessary treatment for four weeks, if not longer. This delay in treatment can occur not only at the beginning of the rehabilitation process or after six weeks of physiotherapy or chiropractic treatment, but also every time there is a new treatment recommendation or a recommended treatment modification.
Effective rehabilitation is not a series of starts and stops. At its most effective, it is a consistent process, with one form of treatment flowing gradually and smoothly into another. It should not be ground to a halt every time independent assessments are required, and it should not be replaced by assessments. Independent assessments and medical examinations are being widely used at present, and we feel that with the draft proposal as it stands now, there will be an even greater increase in the number of independent assessments. There do not appear to be any guidelines as to when an insurer can veto the health practitioner's treatment plan and the insurer could, as a matter of course, refer many, if not all, insured persons who require additional or other forms of treatment for a DAC assessment.
Every person has a fundamental right to have a say in his or her health care, and as long as the insurer can veto all or part of the rehabilitation treatment plan, the choice of treatment is taken out of the hands of the insured and his or her health practitioner. The procedure proposed in the draft bill assumes that the insurer has a knowledge of rehabilitation that an insurer cannot be expected to have.
Too many independent assessments and a disruption of rehabilitation while awaiting assessment results are not conducive to effective rehabilitation. They limit and impede the rehabilitation process; they deny the importance of early intervention; and they potentially give rise to illness behaviour, the development of chronic pain and psychological distress, all of which become costly to treat.
While the veto power is in the hands of the insurer, the proposed procedure for claiming medical and rehabilitation benefits could result in feelings of distrust, anger and hostility, and could create an adversarial relationship not only between the health practitioner and the insurer, but also between the health practitioner and the insured.
As it now stands, the draft bill offers no latitude with respect to treatment. If rehabilitation is to be effective, and surely with the right to sue having been expanded, effective rehabilitation is extremely important, then more latitude is needed. Consideration needs to be given to allowing the health practitioner's treatment plan to proceed, with treatment costs assured, pending the results of the DAC assessment, if a DAC assessment is indeed required. Consideration also needs to be given to the establishment of definite guidelines to prevent unnecessary assessments. And to ensure treatment is not fragmented, but an evolving, cost-effective process, the coordination of treatment services by someone acquainted with all aspects of rehabilitation is fundamentally important. Thank you.
Dr Kenneth Burgess: My name is Kenneth Burgess and I'm a family doctor from Hamilton. Before being a family doctor, I was an emergency doctor. For about the last 20 years, since I graduated from medical school, I've been dealing on a daily basis with patients who've had motor vehicle accidents. I've seen them from all stages, from when they first rolled in the doors of the emergency department on until through their rehabilitation and then to their either getting all better and going back to work, or having chronic pain with all its problems.
The most important problem I see with the proposed legislation is, I think, that if it's instituted the health and the treatment and the rehabilitation of the patient will suffer. First of all, it's not clear who's in charge of the patient. Every service has to be pre-authorized, thus everything that I and my patient decide what's appropriate will be subject to the scrutiny of an insurance adjuster who's not trained in medicine and will always be concerned about costs.
As for the proposed treatment plan, I'd be very reluctant to commit myself to the format as it's specified in the legislation. It's completely unrealistic to be able to predict the future. No one can know when they first assess a patient how long it's going to take them to get well and how much it's going to cost, and so on and so on.
The second point I'd like to make is defining the minimum of the lesser of 15 treatments, or six weeks of treatments by a physiotherapist, is very rigid and limiting. What if my patient has two front teeth knocked out? Does that mean he has to go see the dentist, and then the dentist has to write up a plan, has his secretary type it, send it to the insurance company for authorization, receive a reply before being able to fix the problem? It doesn't make sense.
The third major problem I have with the proposal is the whole concept of the regulated designated assessment centres, or DACs. Under Bill 164, insurers can force the patient to go for independent medical assessments, or IMEs, on demand. I have a number of patients who've gone through a series of up to five IMEs over a relatively short period. Clearly, the insurer was hunting for a favourable opinion which would justify the income benefits or the treatment of the patient being terminated. In addition, insurers may present the professionals at the IMEs with carefully edited video surveillance tapes before they see the patient in an attempt to influence the assessment.
Under the proposed legislation, if the service provider I send my patient to submits a plan that's rejected, or there's questions about the level of disability, the patient will continue to have to go off to a DAC. The draft legislation proposes taking some control of the DACs and setting up committees to oversee and define their operations and standards and so on.
I fear that these institutions as proposed are too close to the political process, and may well be hamstrung by limits on funding. There's nothing about the proposal that gives me any confidence that the system will not too often be used to underestimate disability or deny treatment.
The proposed legislation still lets the insurer get a patient assessed at any time as long as it's reasonable, but "reasonable" is not defined. Remember my patients who've had assessment after assessment. Is this going to stop that? I don't think so.
My fourth point has to do with the problem of independent rehabilitation consultants who've been coming with great regularity to my office and interviewing me about my patients in the past couple of years. What do I do if I decide that a rehab consultant is harming the patient's rehabilitation? There's no defined roles for these consultants. They're suggesting things that are costing a fabulous amount of money and pushing them. Are there no limits or guidelines or controls on their behaviour? I don't see any.
Finally, I'd like to remind the committee that it is becoming enormously complex to understand the medical-legal dilemmas that my patients are in. The toll of motor vehicle accidents on the physical and emotional health of individuals and their families is incalculable. I see this day in and day out in my patients. Please don't add to these traumatic effects by creating a system that doesn't work and is too complicated for anyone but lawyers to understand. Please don't add to the insurance nightmare. Thank you.
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Mr Morris: As the lawyer in the group, I'm not sure all lawyers understand this proposed plan or the predecessors. Some of you will recall that PAIN was created in late 1989. We are a coalition of innocent accident victims, health care professionals, business and labour representatives, police and lawyers.
With the proposed legislation this government is contemplating, PAIN feels compelled once again to make representations to this committee on account of the real, dramatic and draconian clauses that will further erode the rights of the innocent accident victim only to the benefit of the insurance company. In any insurance scheme, the government must try to balance the insurance premiums the consumer has to pay with the rights accruing to the accident victim for benefits and damages.
The most renowned and respected consumer advocate in the world for the past 35 years has been Ralph Nader. We brought Mr Nader here and he spoke to this group, and I quote from the paper he delivered:
"The US Department of Transport's report in Washington, 1984, showed that no-fault premiums in the final year of the study were 40% higher than the premiums in the tort law states. What no-fault does is distribute the dollar in a different way; it does not reduce rates."
How prophetic Mr Nader was at that time. Since the inception of the Liberal program to date, well-run insurance companies have made large profits. For those that have not, I dare say the internal studies of these corporations have reflected poor management as a cause. Remember, profits can be adjusted by reserves. The scapegoat should not be the innocent accident victim. The government, for whatever reason, seems now to have presented a plan that will further line the coffers of the insurance industry, and again, to the detriment of the consumer and the innocent injured accident victim.
We heard a lot about the OMEGA plan. This was supposed to reduce insurance premiums to the consumer, increase benefits for the innocent accident victim and allow the insurance companies to make a profit. Our group is here to make representations on behalf of the innocent injured victims. Regrettably, the legislation proposed empowers regulations to be implemented that will further define the clauses and, unfortunately, no one has any conception as to what those regulations will be. In fact, the introduction of this legislation is premature until the public knows exactly what the government intends to do.
The government proposes to restore the right of the innocent accident victim to sue for loss of income and future losses, or at least this was its commitment, so I understand. Allowing accident victims to recover only 85% of net for the future is illusory, unfair and misleading. Indeed, it provides an appearance of smoke and mirrors.
You've had a lot of examples. You've already dealt with a fatal accident, with other speakers here and the lack of financial benefits for the surviving spouse and the dependents. We know about young people, you've had them spoken to as well, high school kids, university, kids at elementary school; the homemaker, the ordinary wage earner who is deprived of merit increases, advancement in the workplace and things of this sort; the small businessman, the individuals who will be deprived of pension benefits and other payroll benefits. Why is there such insensitivity towards these individuals?
For claims of loss of income in future, it should be 100%. And remember -- again, you've heard this -- the onus is still on the accident victim to prove such losses. Having been a trial lawyer for in excess of 35 years and representing injured parties only, I can assure you that all insurance companies rigorously defend in those areas. Let us have some faith in our judges and juries because, let me tell you, I can't even count on one hand how many times we've had 100 cents on a dollar for future loss. There are always substantial dollars taken off for contingencies.
PAIN still has difficulty understanding why there has to be both a verbal and a monetary threshold on general damages. If there has to be a threshold, surely the standard of "serious" will suffice. Bill 164 called for a $10,000 deductible. I understand the proposed OMEGA was $8,500. Now we have $15,000. In our view, there should be no monetary limit, but if there has to be, surely the $8,500 is too much.
The procedure advanced in the legislation whereby innocent accident victims can sue is onerous, overbearing, unfair and unrealistic to the injured party. Most individuals are unaware of their rights and do not consult with lawyers, generally, until nine months after the accident. To require that individual to provide notice to the insurance company within 120 days of the accident is ridiculous. Pre-judgement interest should be from the date of the accident.
It is the opinion of most insurers that quick resolution of an accident claim benefits the insured party. This is nonsense. Once a proper prognosis can be provided by the treating doctors, only then can it be expedited. In those claims that will meet the threshold of seriousness, a proper prognosis cannot be provided for three or four years. The rehabilitation process also will become more and more delayed, as outlined earlier. The proliferation of paperwork under the proposed legislation can only increase the overall cost to the injured party.
To require mediation within one year of the issuance of the claim not only can be expensive but premature. Mediation should be compulsory, either when both parties agree or when a judge so directs.
We agree that the reduction of the benefits from $1,000 to $400 per week max is appropriate, providing the full right to sue for all economic aspects is there.
I respectfully, in conclusion, ask you to remember the words of Ralph Nader, "Regrettably, no-fault legislation does not save in insurance premiums."
Knowing this to be a fact, it should be the desire of all governments to maintain insurance costs at the lowest possible level. However, with the enactment of this legislation, premiums should fall and the profits of the insurance company escalate. In fact, a few insurance company lawyers have advised me that if you're smart, if this legislation is passed, buy insurance stocks. Don't hold a tag day for them. Thank you very much. We're open to questions.
Mr Kormos: Thank you, Mr Morris. This is the third time around for you -- Bill 68, Bill 164 and now an as-of-yet-unnumbered bill. But look what these guys have done, please. They're no further ahead than any previous government ever was in addressing the issue. They made some commitments during the course of the election campaign: one of them a promise to restore tort; two, a promise to control and stabilize insurance premiums. They're fouling up miserably, none of the two are going to happen and they're using the most crass of legerdemain to try to make it happen.
The tort that's being talked about here is nothing more than an extension of the no-fault benefits for people who would go beyond the cap of $400. The fact is that the difference between the cap of $400 and $1,000 in terms of premium cost is not substantial.
The other reality is that there is nothing about this scheme -- and it's not even really a scheme; it's overly generous to call it a scheme -- there's nothing about this bill that's going to either control premiums or improve the lot in life of victims in general, least of all innocent accident victims.
The Vice-Chair: Excuse me, Mr Kormos, a question please.
Mr Kormos: The fact is, they've failed miserably. It's going to be revealed clearly to the public. The public is as cynical as they've ever been about any government's ability to regulate or control or offer any meaningful insurance reform. If any promise has ever been broken, it's been this one by the Tories, and the drivers and innocent victims of this province are certainly going to respond in a way that's going to be most remarkable to all of them and I'm looking forward to it.
Mr Sampson: I think I'll hold my discussion on whether or not people broke promises on auto insurance reform until perhaps tomorrow when somebody else is presenting to us.
You mentioned the OMEGA plan. Were you aware of any of the costings that were done by the industry on the OMEGA plan and how that trended and what its base cost was?
Mr Morris: I was not privy to that.
Mr Sampson: Would you be surprised to hear the base cost was basically our base cost in this plan and the trend was higher?
Mr Morris: No, nothing surprises me when it comes to insurance figures, because it's smoke and mirrors. I should tell you this, just one brief comment on this, to give you an example of this smoke and mirrors game from their perspective. We talk about these independent medicals, these IMEs or DAC assessments. You will find that these multitudes of examinations are all included in the medical and rehabilitation costs of the patient and are given in your figures, which is totally unfair, because most of them are superfluous and we can give you example upon example of how ridiculous that's --
Mr Sampson: I would agree with you that there needs to be more control of the industry and how they deal with medical claims. There's no question about that. It was in my opening statement. But I just wanted to make sure you're aware that their plan was providing price stability had a higher trend than this one.
Mr Morris: Remember reserves. Rumours are great, but my sources tell me there have been some wonderful profits made this year. Now, whether they're going to show up, they can be adjusted by reason of adjustment of reserves.
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Mr Kwinter: One of the constant phrases that appears in a lot of the presentations when they're trying to defend this idea of not compensating youths, not compensating spouses, is the idea of indemnification as opposed to entitlement and the feeling being, "Our obligation is to make them whole and then they take their chances just like they would have done if they weren't involved in an accident." What is your response to that?
Mr Morris: You can never made a person whole. You've got to do the best you can for that individual. Unfortunately, when a person's hurt -- people don't invent pain. The courts are your best system to determine that and the courts will never give perfect compensation. I don't know whether anybody else can add to that one. It's an impossible question to answer the way you've phrased it.
Mr Kwinter: I'm actually in support of what you're saying, but I'm saying that we keep hearing this idea of indemnity as opposed to entitlement. I think what has to happen is there has to be a redefining of the fact that you can indemnify people with an entitlement because of the fact that they're not going to be whole --
Mr Morris: You see, I'm not sure whether I'm answering your question or not, but it is the promise of this government, as I understand it, that there will be a 30% reduction in income tax. If we were assessing based on this plan today, that would not be taken into account with the 85%. There are so many variables when you go 85%. Believe me, when you use 100%, and then the judge or jury removes for contingencies, then you get a much fairer picture. But your 30% reduction in income tax, to me, is a perfect example in how the person can be penalized.
The Vice-Chair: On behalf of the committee, thank you very much for your presentation today.
Mr Morris: Thank you very much, and remember, you've got our full papers in here; we sort of abbreviated them.
UNDERWRITERS FRAUD CONTROL INC
The Vice-Chair: The next delegation before the committee is Underwriters Fraud Control Inc. Good afternoon. Welcome.
Mr Linden Rees: I'm Linden Rees, Underwriters Fraud Control.
Mr George Milnes: I'm George Milnes.
Mr Rees: We're an independent company of fraud examiners and fraud consultants to property and casualty insurers and industry organizations. The main part of our business is in Ontario, but we also work with American and Caribbean insurers and insurance associations. We find that reason dictates that we recognize that unless one stops writing business altogether, fraud can't be stopped per se. It can, however, be identified, reduced, deterred and otherwise prevented.
We applaud the anti-fraud teeth that the draft legislation provides to insurers, but our concern and our reason for appearing here today is that many insurers will remove those teeth and leave them in a glass by the side of the policy or the claim.
We note that according to the Insurance Bureau of Canada, about 60% of its member companies have signed a "declaration that they're taking certain measures to combat fraud." We applaud this initiative as well, but we can't help recalling that Neville Chamberlain as well had a signed piece of paper and war still broke out. It's our informed belief that the fraudsters in our society have already been at war with the insurance industry for many years and continue to be so.
It's our direct experience in some instances and observation in others that Ontario property and casualty insurers do not approach the fraud problem consistently and in more than a few cases they don't approach it all. They seem to regard it as a cost of doing business, and unfortunately, that cost is reflected in premiums.
It's obvious to us that there is at least overtly an overall communal will within the industry. The Insurance Bureau of Canada has, through its coalition against insurance fraud, sought to raise public awareness of the fraud problem through initiatives such as its linkage with the Crime Stoppers program, the International Association of Special Investigation Units, the Ontario Trillium chapter in this case, based in Ontario, and it's well organized. They actively address fraud problems of a more practical nature.
Unfortunately, it's our understanding that the IBC's coalition, for all its good work to date, is in serious danger of folding for want of continued funding. We suggest to this committee that all property and casualty insurers in this province, whether IBC members or not, should be mandated to support what is, de facto, the only cohesive industry-wide initiative that exists. The criminal element that helps drive up premiums is well organized. Should we, as an industry, be less prepared? We suggest not.
We find that many insurers still pay nothing more than lip-service, if that, to fraud reduction. One company president speaking to us put fraud control down to "nothing more than good adjusting," whereas his claims vice-president was considering putting one anti-fraud person in place for Ontario, one in Quebec and one for western Canada. Even if this plan had come to pass, and it didn't, it would have been, in logistical terms, impossible and actually worse than doing nothing, as insurers who do little often think they're doing enough, and based on a false premise of comfort, tend to sideline or downplay the problem.
One major insurer with a large, sophisticated special investigation unit department chooses to ignore the investigation of fraudulently derived accident benefit claims completely, preferring to concentrate instead on potentially fraudulent property claims. We heard from the IBC just the other day that 49% of the insurance costs are attributable to accident benefit claims. This appears to fly in the face of the direction of the draft legislation before us.
We note that the Canadian Bankers Association, anxious to reduce credit card fraud, assigned funds necessary to attack the problem, and when they felt it had been reduced to their satisfaction, pulled their investigative funding.
We respectfully suggest that property and casualty insurers can't take this approach. Insurers can no longer call 911 for immediate help. Police forces, due to various staffing problems, generally require a case brief investigation format before they can proceed. Even automobile accidents are reported to collision reporting centres, as the gentleman a few speakers ago alluded to. Insurers obtain their after-the-fact, over-the-counter, not-on-the-scenes police reports from them. When phoney claims are paid out, it is ultimately the honest segment of the insuring public which is asked to foot the bill.
In certain of the United States there's a growing regulatory courage to fight insurance fraud. In some states, an insurer can be refused a rate increase if, in the absence of a realistic fraud prevention program, they are subsequently defrauded. In other states, the insurer might be fined an amount equivalent to the fraud right off their bottom line.
These are not, we suggest, witch-hunt tactics, for they don't apply to those insurers who can show they've really tried to curtail the problem. New York state goes a step further by actively checking the effectiveness of insurers' special investigation units and anti-fraud programs. Our own Ontario Insurance Commission has, to its credit, already trodden down this path. We've attached to our handout an exhibit in support of that position.
It's our submission that insurers must now be prevailed upon to set up comprehensive and meaningful anti-fraud measures, whether in-house or contracted to expert, external service providers with no potential conflict of interest. The object of such measures should, we submit, be to train brokers -- because the fraud doesn't just get into the claims area; it gets in the day the policy is taken out -- agents, underwriters and claims handlers to identify potential fraud throughout the entire insuring process and to resist and deter attempts to obtain an unwarranted underwriting or claims advantage.
We feel that deterrence, rather than persecution through an arrest mentality, should be the watchword. We further submit that such measures, when in place, be subject to independent or regulatory review, and that where these measures, within a reasonable parameter, result in fraud, whether it's internal -- and frequently internal fraud is ignored by insurers -- or external, consumer-driven fraud, that insurer be subject, as in the USA, to specific penalties.
In this manner, we feel that a large part of the Insurance Bureau of Canada's projected $1.3 billion wasted on fraudulent claims -- we happen to think that figure is low -- can be applied to the stabilization of premiums, over and above that projected from the initial impact of this draft legislation.
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Mr Wettlaufer: Thank you, gentlemen, for your presentation. I found very interesting what you said, that insurers should be refused a rate increase if, in the absence of a realistic fraud prevention program, they are subsequently defrauded. That's a very interesting suggestion and one that I think we might take seriously.
You also made a comment that we should train brokers, agents, underwriters and claims handlers to identify potential fraud throughout the entire process. That also is very valid, because in 33 years of experience in the insurance industry -- I just left that in June -- I can assure you that there has been a severe reduction in any kind of training. The claims training is severely remiss. The training of underwriters certainly doesn't exist, to my mind, any more.
I thank you very much for your presentation. These are two excellent, excellent suggestions.
Mr Ford: Gentlemen, welcome. As has been pointed out, auto insurance is a complex issue that affects virtually every Ontarian, which is why legislation was brought forward, so we could get public input before the legislation is introduced. We've heard a lot about the level of premium rates. It is obvious that those rates are of concern to the consumer. Where do you see potential savings coming from, other than the fraud aspect?
Mr Rees: We think that the fraud aspect itself -- not to sidestep your question -- at least 16%, and in our opinion probably closer to 30%, is powerful enough that any insurer who can knock off even half of that 8% off the top straightaway has reduced the 8% projection that the insurance industry has come up with as a result of this legislation.
Mr Wettlaufer's comment was well taken about the training. A well-trained individual, whatever his or her discipline, one presumes performs their function in a little more professional manner. Cautious underwriting and cautious claims handling certainly does result, in our own extensive insurance industry experience, in reduced premiums at the end of the day.
Mr Ford: What are those figures again on the fraud?
Mr Rees: The initial study for the Insurance Bureau of Canada suggested that 16% of all claims paid bore some degree of fraud, whether the claim itself was wholly fraudulent or whether it was a genuine claim where somebody had sort of jumped on the bandwagon of opportunism and exaggerated or inflated their claim. We feel it's higher, and I conducted that study for the Insurance Bureau of Canada. We feel it's higher, because the study actually excluded all those claims that had already been reported to the Insurance Crime Prevention Bureau or identified internally as fraudulent.
Ms Castrilli: I'm interested in the New York example and I wonder if you might just elaborate on that a bit. You just alluded to it in your comments.
Mr Rees: Surely. The New York regulatory authorities for the insurance industry seem to take a much more hands-on approach than our own. For example, I can tell you they have a pre-inspection program already in place, and it's not window dressing, it really works. I know that our own Insurance Bureau of Canada is currently rolling out that plan.
They also go out and take a look at what insurance companies are physically doing to reduce fraud. It's not an academic exercise; I know that from firsthand experience. It's a hands-on look. Is it window dressing? Are they putting one person in to look at some 350 claims across the country or are they really doing something? They take a look at where the insurers get scammed and they take a look at what the insurers could have done if they'd have had the plan in place to offset that potential for fraud.
Ms Castrilli: Who is responsible for doing that? Is that their equivalent of the insurance commission?
Mr Rees: Yes, the equivalent to the insurance commission.
Ms Castrilli: You said that $1.3 billion in fraud is conservative.
Mr Rees: Yes. That's based on the IBC's projection of 16%.
Ms Castrilli: What do you think it is?
Mr Rees: I'd say 30, 33, 34, 35, somewhere in that region.
Ms Castrilli: Billion dollars?
Mr Rees: Per cent.
Ms Castrilli: Oh, per cent, okay.
Mr Rees: There wouldn't be much of an industry left if it was.
The Association of British Insurers did a similar study and they came up with 57%, I think it was, of claims examined. Don't forget, these are claims that were paid and closed that bore some degree of fraud, whether they were inflated or wholly fraudulent. It sways a little bit, because some insurers, to their credit here, are very, very active in fraud-fighting. If one was to go in and take a look at their book of closed claims, one would expect the percentage of fraud to be greatly reduced, whereas others who do nothing or purport to do something and do nothing, you'd expect it to be much higher. Our whole point here, I think, is the insurers who are actually doing something are supporting all the insurers who aren't doing anything. They're getting a free ride, they're piggybacking.
Ms Castrilli: Thank you. Point noted.
Ms Lankin: I'd be interested if you have any more specific information from other jurisdictions or references that you could provide the committee that we could have legislative research follow up on. I think that would be helpful to us. I think Mr Wettlaufer's interest, for example, in the area of the fines as an incentive and the kind of training specifically that could be provided to agents and underwriters would be useful to pursue.
If you're right that it's somewhere in the area of 33% and/or could be as high as the British study of 57% of closed claims, there's a huge amount of money that could be saved there which could be going back into the system. It strikes me that this is a problem almost irrespective of what type of insurance system or scheme or product you have and whether it's tort or whether it's no-fault. It may be that under Bill 164, because it was richer, it becomes more lucrative and it attracts that kind of activity, but the activity is there, it seems, no matter the system.
I'd like your estimation, if the companies were doing the job you think they should be doing in their own fraud reduction, what kind of money could be saved? If that $1.3 billion even at a conservative estimate, let's say, is correct, how much of that $1.3 billion do you think you could save and what would that mean for our system? Maybe we wouldn't have to cut benefits.
Mr Rees: I'm awfully glad you asked that question.
Mr Milnes: In terms of actual savings we prepared an example, but to answer your question directly, we would suggest that it would be, at minimum, two to one the cost of their investment -- absolute minimum. We arrived at that by taking the figures as cited by IBC that 49% of the claims are accident benefit claims. Using a company with a $100-million income and an average of 60% or $60 million in claims paid, of this, 49% or $29.4 million would be paid for accident benefits. Using IBC figures of 16% of that 49%, 4.7% is fraudulent. That amounts to $4,704,000.
In addition to claims, a company faces marketing and underwriting and operational claims costs and allocated claims costs. Operational claims costs and allocated claims costs on average amount to about 10% each. Increasing -- and this is very important -- the operational claims cost by just 1% to an overall 11% of premium dollars would provide $1 million for an effective SIU, special investigation unit. In turn, if the special investigation unit were effective to even 50% of what the IBC has identified -- not what we have, but IBC -- $2.35 million would be saved, more than double the return on investment.
May I just finish here by saying -- and I think it addresses a comment earlier -- the industry over the last several years has shifted its focus somewhat from adjusting claims to processing claims, hoping, I believe, that the computer will do a lot of the work for them. But face-to-face contact and basic adjusting skills that both myself and my partner have, covering off who, why, what, where, when and how, need to be asked in a lot of cases.
But even if you go that far and do a proper job of adjusting, the fraud examination work that Mr Rees and I carry out goes one step further than a special investigation unit would address. For example, the postal code of the insured, the broker and the place of employment. You don't dirty on your own doorstep sort of thing. Why would a person go outside their area to get insurance? That's something you wouldn't cover off in a normal investigation, but it is an indicator. That's all it is. The same as you would expect 25% of your losses to be within the first 60 days and last 30 days of a policy period, but we find on average, when we conduct closed-file studies, the fraudulent files are up in the 50% to 60% area occurring in those time frames. So there is a need.
The Vice-Chair: Thank you, Mr Rees and Mr Milnes, for your presentation today. Have a good day.
Ms Lankin: Mr Chair, could I place a question and ask that legislative research provide us with some comparative data on other jurisdictions and regulatory frameworks dealing with the insurance industry specifically with measures encouraging fraud investigations or fraud prevention.
The Vice-Chair: Any discussion?
Mr Sampson: Some of that is in the detailed presentation of the previous group and some of it has been presented to us as well through the consultation process. I can get that to the researcher. I think that's a good idea.
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CANADIAN BAR ASSOCIATION -- ONTARIO
The Vice-Chair: The next delegation is the Canadian Bar Association, the Ontario branch. Welcome. Would you please introduce yourselves for Hansard and then begin when you're ready.
Mr Douglas Los: My name is Douglas Los. I'm the president of the Canadian Bar Association -- Ontario. I practise law in Sudbury. With me today are Gina Brannan, the chair of the CBAO insurance law section, and Tom Andrews, the chair of the CBAO auto insurance committee.
Let me begin by thanking you for providing this opportunity for CBAO to comment on the latest proposals for revisions to the auto insurance laws in Ontario. I might add that this marks the 11th submission that CBAO has made on the issue of auto insurance since 1985. So it's been a well-studied issue to say the least.
Let me also open by noting that CBAO believes that the government has moved in the right direction with the changes proposed in this draft legislation. This move properly reflects increased rights for innocent accident victims, which is the most important part of this entire discussion. The government is clearly starting to address some of the more serious shortcomings that were evident in Bill 164. I would have to say, however, that while there is clearly an improvement over the previous law, in the view of CBAO there is some considerable distance to go before Ontario has an appropriate auto insurance legislation scheme.
We have distributed a detailed brief outlining some of the larger problem areas which we see in the proposed legislation. Let me highlight them for you: (1) The government has not fully restored the right to sue for economic loss. The right to seek a remedy for wrongs sustained at the hands of others is a fundamental tenet of our democratic justice system. (2) The excessively high deductible of $15,000. (3) The introduction or rather reintroduction of OHIP subrogation. (4) The failure to adopt appropriate controls and streamlining for the proposed accident benefits schedule.
I'm going to ask Tom Andrews and Gina Brannan to address these issues in greater detail.
Mr Tom Andrews: I've been working on this issue for about the past 18 months, and I've met with Rob Sampson and Bruce Crozier and a number of other people and the insurance industry and the brokers. We've been trying to work out a comprehensive plan that would give a good insurance product for Ontario, a product that's good for innocent accident victims but also something that's good for the driving public.
As we said, the government plan is a step in the right direction, but we have some ideas that, if they were implemented, we would get a good product that would be stable, that would be better than what I think the government has come up with for innocent accident victims. We're not just trying to look at what would be good for one side of the equation or the other. We've got to have a product that's good across the board, so let me tell you about a couple of areas where we think improvements can be made.
First, where we can save money: We believe insufficient controls have been put in place on the accident benefits side of the product. In our brief we have given you some of the ideas. We intend to give a much more detailed one within the next couple of weeks. The Insurance Bureau of Canada has come out with some very good ideas, many of which were included in the OMEGA proposal, which, especially in this particular area, we endorsed as an organization. With these sorts of controls put in place, we will get at the waste and the fraud, and by getting at that, there will be more money available for innocent accident victims.
Very briefly, some of the ideas:
We still see areas in the no-fault schedule where accident victims are getting paid where they don't have a pecuniary loss, in the case of non-earners and in the case of caregivers. They should be reimbursed for their expenses, but we see no need for giving them what is essentially a general damage award. That is for innocent accident victims on the tort side of the equation. That's our view.
There are also sections that don't adequately deal with people who collect unemployment insurance. We think some savings can be made there.
We're concerned about the definition of "catastrophic" injuries. The way it has been defined, we think it's too open-ended; people without truly catastrophic injuries might access these benefits, and we don't believe that is desirable.
Many of the things we'll come up with are subtle things that will save a dollar here and a few dollars there across the board, but when you put them together it does free up funds for innocent accident victims. Let's face it, that's who we're out to protect.
The second area where we're somewhat concerned is in the reintroduction of OHIP subrogation. We believe that amounts to a tax on accident victims, and an unfortunate one. The government has not been able to tell us so far what that's going to amount to, but we know that in 1989 it was $93 million. With inflation, we would anticipate that it would be something in the order of $125 million. And this is in the context that since 1989 there have been two additional taxes added to auto insurance premiums, a 5% sales tax and another 3% premium tax. It's our view that if this were reduced or eliminated, again there would be a further opportunity to make money available for accident victims.
The third thing I want to raise is what we can do for innocent accident victims. We are very concerned about the increase in the deductible from $10,000 to $15,000. I think most lawyers, if you spoke to them, would agree that the $10,000 deductible has been a good thing; it has got rid of the nuisance claims. But as you go higher, it starts to have a discouraging effect.
When victims come to my office, as they frequently do, and ask me about their claims, I can never tell them, "Oh yes, yours is $17,000 bang on." You can't do that. You usually give them a range, and the discouraging effect of the deductible reaches far beyond the $15,000. It will affect claims as high as $20,000 and $25,000, because you can't know in advance where you're going to end. Who's going to go through the process if you don't know if it's going to be a successful endeavour? People at that range of $20,000 and $25,000 are people with permanent, lifelong injuries, people who have undergone operations, people with fractures that don't heal well. Those are the people we're talking about. I think they're very much deserving of an award for pain and suffering and I'm very much concerned that at $15,000 these people are going to be eliminated from the system.
Another aspect of the deductible which we're not happy with is the way it applies before the assessment of fault occurs. To give a very quick example, somebody who had an injury that was assessed at $30,000 and was 50% at fault would get $15,000. You apply the deductible and he gets nothing. That is a very unfair result. It would be far better if the $15,000 was taken off the $30,000, so you'd start at 30, take off the 15 and get 15, cut it in half for his fault and you'd get the $7,500. That's set out in some detail in our brief. I hope you follow it along so that people with the same injuries will be treated the same.
The major point we are concerned about is how the bill treats economic loss. It's set out in some detail in our brief, and I'd invite Gina Brannan to talk about that.
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Ms Gina Brannan: Thank you very much, Tom, and thank you, members of the committee, for an opportunity to address this very important issue.
With respect to the issue of economic claims, the legislation as it's presently drafted does not address all economic loss. We've listened to other presentations and we've learned that through the process there may have been some errors in drafting with respect to that, and also that things such as loss of earning capacity and the cost of home modification for those who are quadriplegic, paraplegic, will likely be included. We encourage you to include those. If they're not, the devastation that will be found on those innocent accident victims who suffer catastrophic injuries will be far greater than they should be.
Probably the most important economic loss that has disappeared as a result of this legislation is that which relates to fatality claims. This legislation as it's presently drafted does not allow for the surviving dependants of a wage earner who is killed in an automobile accident to seek redress or to sue for the loss of that wage earner's wages at least until age 65. That's clearly unfair.
Let me give you an example of how the unfairness can play out. Take a single parent with two children and that single parent isn't even a member of the driving public. The person walks across the street on a green light and is run over by a driver who's at fault, and the individual is killed. What happens to those two children? The way the legislation is presently drafted, those two children will merely be looking at a $10,000 each accident benefit and a claim for loss of what's called "care, companionship and guidance," which is not a huge claim. They will lose what they would have had, had that mother or father been alive, that is, the moneys earned by that person to put a house or an apartment over their heads, to put food on their table. Those children, in my opinion, will become a burden on the province. We can't afford that. We can't afford to let the person who's at fault not to stand up and take it in the ear, as we say, for something they did. It's just not fair.
People will say, what about life insurance? Life insurance is not the answer in this particular case. We're talking about auto insurance here. Premiums we're presently paying are not going to decrease because you take away pecuniary loss claims on fatality claims. They're going to stay the same. We're going to pay the same, and we're going to get a product that offers less. That clearly isn't fair. Then we'll be asked to go out and buy another insurance premium to cover something that should be covered by our auto insurance. That's not fair and, in our respectful submission, should be addressed.
The other area with respect to economic loss is the 85% of net income. Let me make it clear. If you are killed in an automobile accident and you're a wage earner, your surviving dependants basically get the accident benefits, which are minimal, so really they're getting nothing. But if you are rendered a quadriplegic, if you're rendered a paraplegic, if you are rendered brain dead or in a vegetative state and can't work, the surviving dependants get 85% of net income. To me there's something inconsistent here, that if you are dead and can't work your surviving dependants get nothing, but if you're lying in a hospital bed on a life-support system, your dependants can sue for 85% of net income. That unfairness has to be addressed.
Figuring out loss-of-income claims is very difficult, as it stands. If we introduce net income, it's going to become even more difficult. The difficulty is going to arise when we deal with the future loss of income and how we address positive and negative contingencies when figuring out the future loss; that is, things such as death before age 65, things such as, would the person have been promoted during the period for which they would have worked? Those are going to be very difficult to address. Income tax deductions -- I mean, who can understand the Income Tax Act? But we're now going to have to use a crystal ball in determining net income into the future and try and figure out what the income tax deductions are going to be into the future.
All that's going to do, in my respectful submission, is continue to add to the costs of presenting claims. We're going to have to hire expensive accounting and actuarial experts to deal with these issues. It's not going to be a question, as we had in the old tort system, where they figured out what the future loss of income was based on gross income. No, they're going to have to figure out net income with all these new contingencies, not the least which are income tax deductions in the future. That's going to cost a lot of money. That will be borne by the individual who's bringing the suit; it will come out of the settlement. It doesn't make any sense.
More important, even beyond that, when you look at 85% of net income, you have to ask yourself the question: Why is it that if a wage earner is injured in an accident and cannot work, that family must live on only 85% of net income? Had the person been able to work, they would have had 100% of net income. It seems to me that we have to look at what's fair in delivering this particular insurance product, and to take fairness out of the system doesn't seem to me to be the route that -- well, we as lawyers don't want to see that happen, and surely people who are legislators and have their constituents at heart don't want to see that kind of unfairness for their constituents.
We understand that the government has made some commitments to deal with this particular area. We, the CBAO, are prepared to offer constructive assistance in the best way we know how. We're there when you need us and for how long you need us to offer that constructive assistance. We're prepared to take questions.
Mr Andrews: Just one more point. We would like to see the solution in the legislation, not in the regulation. Now we're open for questions.
The Vice-Chair: Thank you. That leaves us with one minute each for questions. I remind the members that the shorter the questions are, the better answers we can receive from our delegates.
Ms Castrilli: I'm not sure you'll be able to answer in one minute, but I'm going to ask my question anyway. I really would like some information on this on the record. We've had insurance companies come before us and state that part of the problem, a large part of the problem, is legal fees, and that's why insurance payments have to go up. Medical rehabilitation costs and legal fees are cited as the two large issues. Specifically, as you may be aware, the insurance bureau is now saying that there will be increases in insurance premiums of somewhere in the nature of 7% or 8% a year for the next four or five years. It is the position of at least one insurer that when you factor in contingency fees, which will soon be here, we're looking at adding anywhere from 2% to 7% to those costs; in other words, the costs will be in the double-digit range. I wonder if we could get your comments on that.
Ms Brannan: I'll make one point, and then I'll hand it over to Tom.
Ms Castrilli: I'd be happy to receive something fuller from you, because this is an issue you may not be able to handle in the brief time.
Ms Brannan: We've been in the no-fault system, or no-fault/tort system, for almost coming up to six years in June, and the lawyers, for the better part, with the exception of the first-party claims before the Ontario Insurance Commission, have basically been out of it. We don't have the number of tort claims around that were here prior to no-fault. They just aren't there. Notwithstanding the fact that the lawyers' involvement has decreased, insurance rates only continue to increase. I have to respectfully submit that it's not the lawyers that are the problem.
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Mr Andrews: One thing to add is that I don't think contingency fees are a factor. Most people who come into my office who have a serious problem can't pay as they go anyway. The lawyer waits to the end of the day to get paid, just as it will be when contingencies come along. The only difference will be whether you get paid on the basis of your services or whether you get paid on the basis of a fixed percentage. I don't think contingency fees will make much difference. They're already being funded by the legal profession, because the poor accident victim can't pay as he goes. He's out of a job.
Mr Los: One minor point: On the contingency fee basis, the fee will come out of the result, not an add-on to the result.
Mr Kormos: With respect to contingency, please let's be candid here. As I told my friend across the way a little while ago, I never practised personal injury litigation. I come from a small town and maybe we do things differently down there, but for all intents and purposes, contingency fees have been the rule, although not called that, in personal injury litigation for a long time. The legal costs were paid and, if I remember correctly, the figure was something like 15%, and personal injury lawyers I have happened to rub shoulders with take another 15 points out of the settlement and that's what it ended up being.
But aside from that, I am concerned that the bar is being co-opted, is buying into -- your submission today is nowhere near as enthusiastic as it was the first time round, Bill 68, on behalf of the principles of tort. It was spoken of earlier as principles that go back to Old Testament times, Leviticus, among other books of the Old Testament. The bar seems to be buying into no-fault, at least by way of compromise, as long as there's a little bit of tort there, and merging the two principles of whether you're insuring yourself --
The Vice-Chair: Mr Kormos, a question, please.
Mr Kormos: -- or whether you're obtaining coverage to give effect to third-party coverage to protect yourself when you had hurt somebody and somebody makes a claim against you. Is there some sort of compromising going on here on the part of the bar, the world's second-oldest profession?
Mr Andrews: We get accused of some awful things.
We have to be realistic. Our ideas are to have a balanced program, one that will give some stability to the driving public, and that's a program that has some tort, a program that has some no-fault. We would like to see a bit of redress of what the government's come forward with, which would put some more tort in, more for innocent accident victims and maybe a bit less on the no-fault basis, because we think that's where most of the waste and fraud is. I think you're right. We've lived through this a lot and we see a change in perspective over the years.
Mrs Marland: We've been hearing from all the stakeholders for three days now, and for those of us sitting over here, it's probably, for the most part, for the first time in depth. Our parliamentary assistant has been doing it for eight months, as you know, and he's far more knowledgeable than we are. I'm really hearing that an awful lot of people are in this pie, an awful lot of people with their fingers in the pie. Everybody I listen to could convince me they're needed.
I think I'm going to start asking all the stakeholders what advice they have, because the problem is, from my constituents, that they have to pay too much money for their automobile insurance. That's the bottom line. We as the government are simply trying to play a role of bringing all the parties together to resolve that problem.
If it isn't the lawyers' fees, is it the treatment centres? Oh, no, it's not the treatment centres. And then you get down to the poor victims, who aren't even believed that they're suffering. And everybody is in this justifying the need for what is very often a very sad end result for the victim.
Mr Los: You raise a very valid point. Let's call a spade a spade. The innocent victims of car accidents have been victimized by our automobile insurance legislative scheme for the past six years, and they need to be paramount. Our presentation here today talked about remedies and rights for victims. We did not raise the issue of fees; it was in response to a question. I agree with you: That is the primary concern and we have to all keep that in focus.
Mr Andrews: We've been working for the past 18 months to try to put together a compromise plan, and we've met extensively with insurers and brokers and whatever. I'm sure you've heard the name OMEGA. We were part of the consultations that led to that. That wasn't our first choice. We went to all the stakeholders in the system and tried to get something that would be stable, fair for accident victims and good for members of the driving public. That's our focus. We're trying to take a broader view.
The Vice-Chair: Mr Los, Mr Andrews, Ms Brannan, thank you for your presentation. Have a good day.
ASSOCIATION OF CANADIAN INSURERS
The Vice-Chair: The next delegation before the committee is the Association of Canadian Insurers. Good afternoon, and welcome to the committee.
Mr Bob Purcell: Thank you, Mr Chairman, ladies and gentlemen. We've handed out a brief. With the time frames we won't be able to cover it completely, but we will try to highlight it for you. On the front page you will see the full titles of the individuals here today. I am Bob Purcell, and I will speak for the Association of Canadian Insurers. With me are Dieter Mayer, Don Wright and Sue White.
Moving right into the introduction, we would like to set a context for our comments today and we are also hoping to bring with us some solutions, some real suggestions that will work and make this product the kind of product it should be.
To set the context, we are a group of insuring companies that are Canadian-owned. We've looked at the package carefully. We've had our working committees look at it, and we think it is a good building block, a good foundation for auto reform in Ontario. We think it makes an excellent platform, but we're going to offer some very specific solutions and we want to comment on the thrust of those solutions.
We look at five headings that need to be addressed.
(1) The reform package has to end up being fair. It has to be something that people can recognize as fair for everyone involved. But you also have to realize when you do that that it cannot be all things to all people and still remain affordable. I think that theme comes over again and again and again. I don't envy the group here, the committee, or the government, because you're going to be left when this is all over with a fundamental question. You're going to have to answer the question, what basic coverage does the consumer actually need and how much are they willing to pay for that? That's where you're going to end up. We think some of the solutions we're going to offer will help you in that respect.
(2) No one can deny that the rapidly escalating costs of Ontario auto insurance, particularly under Bill 164, have to be stopped. It's far too expensive and no one can continue to fund this escalation.
(3) You require a stable product. I honestly believe we only have this one more chance at it. We collectively, everyone involved, have been beating this up too much. We'd better get it right this time. As we look at getting it right, we hope that some of the solutions we bring make some sense. We will point out, on stable product, that we feel the most destabilizing portion of the product being presented is the economic and non-economic loss tort, the return to that.
(4) The government wanted a broad consensus. I think they've tried hard to get a broad consensus. We congratulate the government for bringing forward a base product that probably has as much consensus as you could ever have from all the stakeholders. However, there needs to be some adjusting to that. But there are two fundamental ingredients we have to keep harping on, that when you're done with this, you have to make sure it's a fair system and an affordable system.
All the presenters here, with the exception of a few individual injured people, are people who rely on the system for their very existence, including myself. I work for an insurance company. There are three players involved in this whole process: There are those who have to fund the system, there are those who have to access the system because they're injured, and there are all the rest of us before this committee who live off the system. Don't forget those other two very important ingredients, those who fund it and those who have to access it, when you're doing this.
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(5) The other prerequisite was that there should be no offloading of costs on to the public system. We agree with that wholeheartedly and we would emphasize that we all have to realize that the dollars involved in funding the auto system or the public health system originate in the same pocket. Don't forget that.
Now we move on to page 3.
We make a general offer of assistance, and this is a sincere offer of assistance, as it moves into clause-by-clause review. We have, with our member companies, varying degrees of expertise. We have people who are hands-on, and we make a general offer of assistance.
Some red flag areas: first, the tort area. As to economic loss, we believe a return to tort is probably the best way to deal with many of the issues surrounding people injured in a automobile accident and we believe that people who are innocent victims should have this type of remedy. We think you need to make absolutely sure, under the economic loss side of it, that it is pure excess, that any available accident benefits or no-fault benefits are fully accessed. By doing that, you end up with a filtering system. If they filter through the first-party program, you're viewed as having a legitimate claim for excess loss. Most of the lawyers who come before you will admit that if there's a legitimate claim, it very rarely ends up in court; we find a way to have a mutually acceptable solution. So you need to be careful that this filtering occurs.
Non-economic loss for pain and suffering: We feel that the word "permanent" should be inserted into that verbal threshold. You have to bring in some element that shows it is prolonged and ongoing so that you do separate the wheat from the chaff and you end up allowing this money and these funds to go where they are absolutely necessary.
Accident benefits: We don't think there should be any entitlement benefits in a product. It should be based on remuneration for loss. There should be no benefits in the product that are just benefits we'd like to give to people as a gift because we feel sorry for them. I would like to do that, but nobody can afford to do that.
Under the same heading, there should be no "Pay now, dispute later" provisions. They're unnecessary; they don't occur in any other insurance product. It's in the insurer's best interests, who is the gatekeeper of these products, to get out there and do the job right initially. Our company, the one I represent, is the largest personal lines insurer in Canada. We have the most individual homes insured. We have no "Pay now, dispute later" for house fires, but you will find us on the scene, often before the fire trucks leave; you will find us there helping people mitigate their loss, helping people board up their homes and getting them into hotels. These are the same people and the same employees who have to deal with these products. It's in our own self-interest to get out there and do the job right, so you don't need "Pay now, dispute later".
Definition suggestions: This are where we're getting into some very specific suggestions. This is a housekeeping one, but "spouse" -- you should also repeat it in the regulations. Most people, when they're dealing with it hands-on, deal with the regulations and don't have the act out all the time. It makes more sense.
The definition of "accident" -- and what these solutions do will allow us to be good gatekeepers. We heard the presentation earlier about fraud. The insurance companies aren't doing a good job, but one of the reasons they're not is that they do not have the tools, they do not have the ability to be the effective gatekeepers the way the legislation is currently written. We need that opportunity. This is the way you do it. When you have an accident, you define it and you move in the words "in which loss causation is directly related." If you don't put that in, the way the wording is now you can't relate it directly to an auto accident and you can't relate it to the cause of the injury. You need to do those type of things.
As for as the definition of "catastrophic impairment," I think most of the groups that have come in here are very unhappy with (f), the catch-all at the end of "catastrophic." We give you a specific solution for that. We say delete (f) as it exists now and insert a new (f): "third degree burns affecting at least 60% of the injured person's body" -- unfortunately, burns are a big part of serious injuries in automobile accidents -- and a new (g), which is a catch-all but says, "Any physical impairment or combination of physical impairments creating a need for ongoing professional attendant care...to the needs of (a)."
If you go back, (a) is a very serious injury. If someone needs that level of care from a professional, then they should be considered catastrophic. So that's a good solution.
If you look at number (4), a definition of "insured person," you need to tie the existing priority of payment rules. The last three governments worked on that. They finally I think have it in place and it seems to be working extremely well, so let's not throw it away.
If you look the definition of "health practitioner," occupational therapists should be added with respect to formulating a treatment plan only. That may not be possible because of the legislative definition of a health practitioner. If you can't do it in that area, then you should show that they have a responsibility in the area of helping to put together a treatment plan, because it's based on remuneration; it's based on not going back to work; it's based on not having that type of access again.
Exclusions. We need to put suicide or attempted suicide in the exclusions to avoid the confusion. Also, anyone knowingly operating or using an uninsured vehicle should not have access to the system, period. They made that choice when they stole the car.
When you talk about penalties, we think the fines have to go up. We also recommend that uninsured vehicles be seized and impounded immediately by the police. They may be released later. We do that with unsafe vehicles. Why don't we do that with vehicles that are operated by unsafe drivers? Unsafe drivers are more dangerous than unsafe vehicles, so there should be something there.
Specific suggestions. I don't have much time, so I'll cover what we did: economic loss, non-economic loss, accident benefits, the levels -- there should be no pay-now. Benefits at age 65, we're willing to work with you. There should be some wrap-down or there should be some change at age 65 that takes into account that you're leaving the workforce.
Non-earners. That's a red flag area; that's where you have the $185 that is basically a luxury we can't afford. The insured person, accident benefit coverage, caregivers -- you should insert it should be the primary caregiver. It's a simple little word but very important when you come to deciding whether or not there is a true loss involved.
Medical and rehabilitation. We need the tools to be the gatekeepers. But as we say that, when you talk about the treatment plans, the legislation requires you to have a treatment plan. Let's have some flexibility there. Most of our insureds, believe it or not, we get along with extremely well, we cooperate with very well. If we mutually agree that we can have a verbal plan or we can waive a plan, that the people are going to go back to work in a couple or three weeks, then let's do that. But let's have the ability that if we have an impasse, where one side or the other is not cooperating, then it becomes mandatory and you can make that happen fairly quickly.
There's too much adversarial context to this. We have to realize we deal with a lot of very good customers we want to keep as very good customers. So it's important that we do that.
Designated assessment centres. Again, there should be freedom of choice there. It's fine to have them, and we think they're working fundamentally not too badly, but instead of having to go to a certain geographic one, have that ability if there's an impasse, if either side won't cooperate with the other, then boom, that's where you have to go. But for the most part, have a nice list of DACs, have a list of qualified physicians, specialists, people who are available who have been scrutinized and properly put on the list, and if we both agree and it makes sense, then let's just go straight to them. Have some choice there.
Income replacement benefits. There's no bottom end to it and there should be. We have people who have very limited income, kids who work in McDonald's or something just on the weekend and don't make very much; they don't make the $185 a week. The only thing that happens out of the accident is that they may not be able to continue at McDonald's for a few weeks till they recover, so you should be able to give them 85% and you shouldn't be forced into $185, give them a raise for not going to work when they were only making $50 a week going to work.
Conflicts of interest are extremely important. This is something that has to be dealt with in a clear and decisive fashion. We think that's important.
Pre-approval of services. Gatekeepers require that. If you're going to have us perform the role properly and you're going to have us do our function right, we have to be able to pre-approve.
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By the same token, there should be penalties for insurers who do not perform and do not do their job right. Hold us accountable. We're willing to do that. We're willing to do our job properly if you give us the tools to do that.
Accident benefits or attendant care. Decisions of the DAC should be binding on both sides. Right now, they're binding on one side. What kind of a decision is that?
Accident benefits for death and funeral; we mentioned suicide.
Optional benefits. This is an area where we want some consultation. When you implement this, there will be a phase-in period. If you've got all these optional benefits, some of them should be read into existing policies right away for certain periods of time. That has to be talked about.
Notification of the public. You've got to make sure they know that they have options they're required to buy, so let's make sure we do that nice and smooth and seamless for the insuring public.
Student benefits. This may be the one area where the $185 works, because the student is not getting it for nothing. Students are planning on eventually finishing their education and entering the workforce. So there could be a phase-in to that two-year period, but at the two-year they now have a test for activity of daily living. That test should be the same test you apply for someone who is going to be employed, and it would make more sense.
Visitor expenses. We made some comments there, and housekeeping.
Case management is a big red flag. You need accountability. One of the quickest ways to make accountability work there is to move that within the limits that are available for accident benefits. Then they have to be extremely careful how they use case management, because it's a very important part of the whole rehabilitation process. They have to be very careful because then it's part of the victim's money. That brings accountability in itself to it. What makes case managers any more valuable than the attending physician or the surgeon or whoever else we're paying for the rehabilitation? They all should be under that same umbrella.
Cost of examinations should require pre-approval. Loss transfers were commented on. Exclusions were commented on. Dispute resolution, we applaud trying to streamline that and we'll work hard with you on that. Rate approval we applaud.
Anti-fraud measures. One thing needs to be added. The two anti-fraud measures that are there are great, but you need to also add examination under oath. That's considerably different than a sworn statement. Examination under oath really gets at the crux of the abusers. That's an important tool to have in place.
Health care recovery. We haven't talked about what the percentage will be, but again, as we talk about that, think about the ability to pay by the consumer. It's always got to be paramount in our minds, whether you collect the money through the insurance industry or through an OHIP premium or a tax, it's all coming out of that same pocket.
We ended up by quoting Mr Henry Ford, who says, "If we are all moving ahead together, success will take care of itself." I think we need less adversarial relations and we need a lot more people focusing on that same person who funds this system and that same person who needs that system.
With that quick overview, we're open for questions.
The Chair: It'll be a challenge, questions. Can we start with a very brief question from the third party.
Ms Lankin: I have six questions.
The Chair: I made no editorial comment whatsoever.
Ms Lankin: I noticed. There are a lot of things I'd like to ask you. Perhaps I'll have a chance afterwards out in the hall. Let me just ask you, if all of your recommendations were worked on and incorporated in some way or another, what do you think would happen to rate stability versus Mr Miller's estimate of 7% to 8%? And one other quick one: Why does Dominion not agree with this presentation? What aspects do they disagree with?
Mr Purcell: What would happen with rate stability is I think you could have a much better chance of proper, real stabilization. We did not have time, as the Association of Canadian Insurers, to do our own pricing on this. Individual companies are, our company individually will be, presenting in London and we hope to have some of those specific answers for you. But it is obvious with the solutions we're proposing that it is a less expensive product and it gives us that ability to get at the soft cost, which is how you handle it, the process, the gatekeeping ability. That in itself should give us the opportunity to do a lot more with a lot less.
Ms Lankin: And Dominion?
Mr Purcell: Dominion, where they differ -- and Mr Cooke has to wear several hats, as chair of the IBC committee and their recommendations, and then Dominion, and Mr Cooke worked extremely hard on trying to get a level of everyone buying into the system. I think he's done a marvellous job coming that far, but when you get to this stage, IBC, Mr Cooke and all those people have delivered a very good foundation, but we only have this one chance to do it right. So we, in good conscience, have to point out the areas that we think need adjustment.
Mr Wettlaufer: Yesterday we heard that 4% of the proposed IBC increase of 7% could be attributed to sheet metal costs. Have you done any costing on the individual segments in the AB, the bodily injury, to see where they can be pared?
Mr Purcell: No, as the Association of Canadian Insurers we have not done any costing on this yet. Individual member companies are working frantically on that now. The actual product only came out on Friday, and we just had access Monday to the package of pricing that was provided, so our actuaries are burning some midnight oil.
Mr Kwinter: In your brief you say, "We would emphasize that this should not be a political solution but rather a pure insurance product that serves the consumer." This is a political venue, and I'm telling you that we are talking about a political solution. If we weren't, why would you be any different than any other sector in the free economy? You'd go out, you'd set your rates, you'd compete with each other and sell your insurance. It is a political issue.
To give you an example, my colleague today asked one of the presenters, "What do you think the right price should be?" He said, "I think about $700." His number that he had was about $1,100 or $1,200. He may have the best bargain in the world at $1,200 but it doesn't really matter because he doesn't understand how the rate was set, he doesn't understand how insurance works; he just says: "That doesn't sound like a good number. A number that sounds better to me is $700." What the challenge of the government is going to be is, how are we going to come up with a number that is politically saleable? Everything else stems from that. Do you have any comments on that?
Mr Purcell: I'll take you back to the fundamental question I raised. When we leave you and everyone else leaves you, you're going to be faced with the question, what basic coverage does the consumer actually need and how much are they willing to pay for that? You're going to be left with that. If we were designing a product as a company, those are the kinds of issues we have to address and come up with.
All we're asking you to do is to approach it that way, to forget about this big group of people coming in, including myself in the middle, that lives off the system, and think about those who have to pay for the system and those who absolutely need the system. You do need us in between, but when you're looking at it, if you go back to that product mentality, you will come up with a better solution. We've tried to help with that.
The Chair: Mr Purcell and the Association of Canadian Insurers, thank you very much for your presentation today. We certainly appreciate it.
HEAD INJURY ASSOCIATION OF TORONTO
The Chair: We now welcome the Head Injury Association of Toronto, Mrs Crawford. Welcome. We have your presentation being distributed. Please proceed.
Ms Ruth Crawford: Actually, my presentation is almost verbatim. The main mandate of the Head Injury Association of Toronto is to provide information and support to survivors of brain injury and their families. We currently have a membership of over 600 in the Toronto area.
Brain injury is different from any other physical injury. Your brain is in a very real sense the basis of who you are. It is your brain that determines how you get along with others, what you like or dislike, your work habits, your talents and abilities, your physical capabilities, your personality, everything that makes you you. Everything you are is very vulnerable to a brain injury.
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The concerns expressed in this brief are directly from our membership, from those who are actually living with the effects of brain injury. Our concerns are primarily in the following areas: first of all, the definition or classification of brain injury; second, timeliness of making a claim; third, ensuring objective and unbiased diagnosis and assessment; fourth, medical and attendant care benefits; and lastly, access to the tort system.
First of all, under definition or classification of brain injury: We disagree very strongly with the use of the Glasgow coma scale as a classification of levels of brain injury. This scale was never intended to be a measure of impairment and/or disability. The higher level of funding for medical and rehabilitation benefits must be available according to need. It is imperative that classification be based on a view of the whole person and how they're actually functioning in their home, in the community and in the workplace. Functional assessment is key.
We're especially concerned for those with what would be termed mild to moderate injury, where the disabilities are often invisible. Many of these victims face monumental changes, including cognitive impairments, psychological reactions, physical difficulties, family and social upheavals. All too often, these people are denied the treatment and support they require and their cases are closed too quickly.
There have been some suggestions of more appropriate methods of determining impairment. These include the Glasgow outcome scale, the World Health Organization's definition of impairment, disability and handicap, and a scale drafted by the Ontario Association of Speech-Language Pathologists and Audiologists. While none of these methods are perfect, they're certainly a huge improvement over the Glasgow coma scale. In addition, brain-imaging techniques are constantly improving.
Our second point, under timeliness or time lines: We strongly feel that the time lines for notification of a claim are very unreasonable. In the case of brain injury, the original period of two years was more practical.
Unfortunately, due to the nature of brain injury, the need for rehabilitation or the need to commence an action to recover losses may not be apparent for some time after the injury. In most cases, the victim and their family, and sometimes even their doctor, tend to concentrate their concern on the more obvious physical injuries and are unaware of or lack the understanding of the seriousness of the brain injury. It's often not until some time has passed that the effects and full implication of the brain injury are faced, or even an appropriate diagnosis is made.
Third, ensuring the objective diagnosis and assessment: We're very pleased to see that designated assessment centres will be relied upon to provide objective, unbiased diagnoses and assessments. However, because of the great responsibility these centres carry, there must be assurance that those involved have the appropriate knowledge, skill and experience with brain injury. It is imperative that a quality assurance framework be in place to ensure the effectiveness and efficiency of the DAC system.
Under medical and attendant care benefits: Under medical benefits, we're very concerned that the limit of $75,000 for treatment is too low for most brain injury cases, especially if there are additional physical injuries. As mentioned earlier, all too often the physical injuries receive the primary attention while the longer-lasting cognitive effects of the brain injury are ignored and not treated.
Under attendant care benefits: In some cases a brain-injured person requires 24-hour care or different levels of attendant care at different times throughout their recovery. The monthly limit for this care is sometimes simply not sufficient to provide the amount of skilled care that may be required for some individuals. The allotment of these funds needs to be flexible to meet the individual needs.
Lastly, the access to the tort system: It appears to us in reading the draft legislation that dependent spouses, children, the temporarily unemployed and students will not have the right to sue for economic losses. Now, clearly this is unfair. It especially hurts the group that is at highest risk of suffering a brian injury, those between the ages of 18 and 28, who are often still in school or not yet settled in the workforce.
We know there are probably a lot of other issues in this legislation that have impact on brain injury victims. However, we don't feel necessarily qualified to speak on all of those. But we do thank you very much for the opportunity to express our concerns.
We understand that brain injury cases present unique challenges, but we ask that this uniqueness be recognized and dealt with appropriately. We know only too well how devastating an injury to the brain can be, not only to the victim but to their family and loved ones and to society as a whole. We sincerely hope you'll take our concerns into consideration and revise this legislation to ensure that brain-injured victims receive the help and support they need to lead as fulfilling and rewarding a life as possible.
Mrs Marland: Ms Crawford, thank you very much for your excellent presentation. I guess it's like everything else. The more times we hear several of the same points being made, the better we understand it and the better we learn about the ramifications. I think it confirms for all of us the reason that our government introduced this as draft legislation. I see now the real importance of why it is in a draft form.
We did have a group this morning on head injuries, and I'm sure you know the name of that group.
Ms Crawford: It was the Ontario Brain Injury Association?
Mrs Marland: Yes, that's right. They were out of time, and I followed them out into the hall, because I'm quite willing to admit that I hadn't even heard of the Glasgow coma scale before this week.
Ms Crawford: A lot of people haven't.
Mrs Marland: That's the wonderful thing about life, isn't it? We learn something every day. They were talking this morning about the Glasgow -- oh, dear.
Ms Crawford: Outcome scale.
Mrs Marland: Outcome scale. Thank you. The question I asked them was, what experience is there around the world with either of those scales, and is there somewhere in the world where someone is doing it better that we can be compared to in our province?
I guess the difficulty is the fact that in our draft we've established this step between $75,000 and $150,000, and that puts a greater onus on us to have that diagnosis be accurate. I suppose, when we look at whether it's $75,000 or $150,000 and we listen to some of the deputations that have been in here, I'm wondering if there are enough data available that we would ever be sure what the figure should be. I'd like you to comment on that, because I'm wondering from your involvement whether there are in fact a few people with less severe brain injury for whom $75,000 might be all right, but then there might be others who might need $250,000, and how could we meet that challenge?
Your very last sentence, where you say you want "to ensure that brain-injured victims receive the help and support they need to lead as fulfilling and rewarding a life as possible," I can assure you that's what this government wants, and I think, with quite humility, the two opposition parties. That's what we would all want, no matter who the government is.
Ms Crawford: I think we recognize too, and I think that's why I tried to make that statement, that we understand that brain injury is unique. It is a tough, tough thing to handle. As most people in the brain injury field will say, a lot of the research and the technology has all come within the last 10 years. It is a very new field, and they're learning more every day.
As I said, there is no perfect way. Because brain injury is so complex, there's no sort of specific way you can slot anyone and say, "Okay, this one will be this and this one will be that." Some of the results of a brain injury can be very subtle.
I think what's important is to somehow build in some flexibility there, but also to make sure that the people making the decisions have the appropriate knowledge and expertise. Unfortunately, we hear horror stories every day of people whose cases have been wrongly closed quickly or misdiagnosed because they weren't going to the people who had the real brain injury expertise. I think that's a key one.
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Mrs Marland: So how do we get around that problem?
Ms Crawford: I'm not a medical person and we don't profess to be, so this is not sort of an official thing, but I know the experience with brain injury is really growing in Ontario. We've got some real good centres of excellence. That's why I think the designated assessment centre -- we're really pleased to see that in there, but somehow making sure that those DACs are really able to do what we need them to do, making sure that the appropriate experience -- maybe it means having one that's specifically for brain injury. But somehow make sure that the people making the decisions know as much as there is to know about brain injury to make the right decisions.
Mr Crozier: Thank you, Ms Crawford. You've spoken to timeliness, and when you did you said that, "Unfortunately, due to the nature of brain injury, the need for rehabilitation or the need to commence action to recover losses may not be apparent for some time after the injury."
The previous presenter said there should be no pay now, dispute later provisions. So having said those two things, can you tell me, are there those cases, and how concerned are you about them, where there needs to be immediate action and it may in fact be a provide now, pay later situation?
Ms Crawford: Again, this is one of those tough things. When a brain injury happens to somebody, families are very unprepared. I know when a brain injury happened to my older sister -- that's why I'm involved -- we were completely unprepared. When somebody breaks a leg or loses a limb, there's something visible, there's something tangible to see and to talk about and the treatment plan is much more clear. But the brain injury is very difficult. It's a whole new world.
This creates a lot of difficulty for a family to be aware, very quickly after the injury, just how serious it is, whereas the treating physicians or the treatment team might have a much better idea. It's still very difficult to know in those first early stages really how long that will go. Now, medical professionals might be able to give you a better idea of that than I would, but it is a struggle. There's a certain amount that the treating team will know much better than the family, in which case the family needs to take that advice and information, and the insurance company needs to respect that information, but also realizing the family may not have let that sink in enough to know to make the claim that they need to make. They might not realize that for a couple of months or possibly even a year. They keep thinking it'll all go away. The person looks fine; therefore, they'll be fine. And that's just not the case.
Ms Lankin: Thank you very much. That really speaks to your point on time lines, as well as the whole experience in the last few years with the growing knowledge of brain injury and the problems attendant to that. It's still a new field, even with the experience that we've built, and it is kind of a medical problem that perhaps won't manifest itself till some time down the road. So it's a very important issue that you raise.
I want to ask you about the medical benefits and the limit of $75,000. We heard a recommendation from the Association of Canadian Insurers that in fact under that limit, case management should be included. Currently, under the proposed legislation, that's excluded.
I think this is a real issue for us to grapple with. I'm concerned that $75,000 in itself is too low and too arbitrary for some cases where there are, particularly, combined head injuries and physical injuries and yet where the person may not make the assessment for catastrophic impairment.
Case management is a critically important part of helping people. I had an individual situation when I was in the Health portfolio, where I learned much about the need for more treatment facilities here in Canada, and we started to put that in place. It was an individual where the husband was in the States. We were paying for that residential care, and the wife, who was a social worker, was able to put together a case management plan here, with local services. It was an incredible effort on her part to do it, and it cost the state less to pay for that, and the individual was back home with the family. It was a wonderful solution. Translate that over in terms of how important case management can be if done effectively, and particularly in these cases.
Could you comment again on the $75,000, and particularly on the recommendation we just heard to include case management under that accident benefit cap?
Ms Crawford: I think you've raised an excellent point about the need for that. As I said, very often with the injured individual, their family is left with that full responsibility of coordinating this care, which is completely overwhelming. Unfortunately for some people, especially if the brain injury is in combination with other injuries, you're right, the case management is a very key role.
That's where we really stress the need for flexibility on an individual case basis. I know that's difficult, I know that raises a lot of challenge, but it's the only way people are going to get the help that they really need.
As you said, we can save a lot of money in that way. We've seen so many situations where families or individuals are shuttled back and forth for this test, while this guy, the insurance company disagrees with that test, so they have to send them somewhere else. There's a three month wait to get in there, and it's back and forth and disagreeing. It's a definite waste of funds, but it's also very trying for that individual, whereas, the more coordinated it can be with people who are informed and knowledgeable making those decisions, it can only help the situation. I agree very strongly that case management is a very key role for a lot of those cases and needs to be built in in some way, in some flexible way, for the cases that need it.
The Chair: Thank you very much, Ms Crawford. We appreciate the Head Injury Association of Toronto for their presentation to us today.
WALKER, FOX AND SCHWARZ
The Chair: We now have the firm of Walker, Fox and Schwarz: Jason Schwarz and Mr Gillen.
Mr Jason Schwarz: No, Mr Gillen's not here. You get me alone.
The Chair: Mr Schwarz, welcome. We look forward to your presentation.
Mr Schwarz: Thank you, sir. I provided a summary. What we've done is that my firm, since the draft legislation has come out, has taken the opportunity to go through the legislation and make substantial comment on the various sections in a very detailed fashion with recommendations. We understand how difficult it is for the government to be able to deal with all the issues, and have offered the best we can in terms of support and help in terms of dealing with it.
To give you an idea who we are, Walker, Fox and Schwarz, and myself in particular and Mr Gillen, Mr Gillen sits on the dispute resolution committee of the Ontario Insurance Commission. Our firm processes between 600 and 1,000 car accidents a year in terms of acting as plaintiff counsel; not defence counsel, plaintiff counsel. We probably do as many mediations and arbitrations at the Ontario Insurance Commission as any law firm in the province of Ontario, if not more. We're what we would summarize, ladies and gentlemen, as being in the trenches, and as such what we've done is provided you with information from that viewpoint.
We think any government that is taking on this legislation is facing the impossible task of pleasing a public that doesn't want the cost of insurance to increase, and facing an insurance industry that wants to earn as much as it can. It's a very difficult position. The legislation, as drafted, is difficult legislation, and we've done the best we can to assist you.
What I've chosen to address you on today is only two issues. I trust you'll have the opportunity to review the material we've presented, and I'm hoping it will assist you in some small way in redefining this legislation, or at least adding to it with regard to its final resolution.
Today I'd like to address the issue of the threshold and the deductible. To do that, I'd like to invent a hypothetical woman whose name is Mary. Mary is a housewife. She has three children, they're 10, six and four, and Mary is on her way one day to buy some groceries and she's rear-ended by a dump truck. As a result of the incredible impact, she suffers what is often called in the insurance industry a simple whiplash. Because of that simple whiplash, the extension flexion injuries that are involved, Mary goes through 18 months of absolute agony. She goes to a hospital, she has some concussion, she receives the best rehab the province of Ontario has to offer, but she suffers, and she suffers incredibly. After 18 months she's almost better, but she's got residual symptomology.
Having done this since 1978 as a lawyer, and since 1976 as an articling student, I can tell you that whiplash is a serious and real issue. Poor Mary has had only the ability to hire a substitute mommy under the proposed legislation at $250 a week, who's to take the place of what she's been able to do in her home. Her children have suffered, her husband has suffered, but more than anyone else Mary has suffered.
It's now close to two years. She's done everything right. Let's assume she's gone to a lawyer, they filed the appropriate notices -- and we've got our own comments in our notes about the notice provisions and how they affect people who are seriously injured or partially injured -- but at the end of two years when it's time to issue a claim, she goes to her lawyer and says, "I want to start the action." Her lawyer turns to her and says: "Mary, I know you're still suffering. You still see your doctor once in a while. Your rehab's over. But the real serious suffering's over."
If you go by precedent, as we lawyers in the province of Ontario do, Mary's worth somewhere between -- let's use a large range to give the benefit of the doubt -- $12,000 to $20,000 at the end of two years of pain and suffering. I think that, based on my experience, I can probably talk an insurance company into $17,500 as a settlement. Who's going to be retained by Mary? What is that woman entitled to? That woman will get nothing.
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Let's call it the way it is. I think the deductible is totally absurd at the range of $15,000. That is based on the experience of doing 1,000 car accidents a year for 10 years. People suffer serious injuries when their disability continues in excess of one year. I urge this committee, I urge the government, to reconsider the deductible. Both the bar and various insurance agencies, to my understanding, agreed that the deductible should be less than the present $10,000. I don't even have a problem with the present $10,000 under Bill 164.
The tort world has always taken care of itself in terms of costs and in terms of the marketplace. What we are dealing with here is a totally different issue. An arbitrary figure of $15,000 has been selected, and what it is doing is effectively depriving 80% of the people with legitimate injuries that are serious from having any recompense. I do not believe it is appropriate or fair. I believe there should be a deductible, because we have to get rid of the painful one-year whiplashes. Insurance companies paid $4,000 to $6,000 to get rid of these cases, simply because it was cheaper to pay plaintiffs' counsel than it was to litigate. But there should be a deductible of somewhere between $7,500 and $10,000. That's fair.
In my scenario, Mary would receive $8,000, $7,000, $6,000, $10,000, somewhere in that range, as a settlement, tax-free. That is at least something to take into consideration, the fact that not only is she not entitled to receive any accident benefits, but her right to sue was taken away in 1990; now it's being put back on a level that doesn't take into account normal people suffering serious injuries. We cannot only deal with the issue of catastrophic injuries; we must deal with legitimate, injured people.
Under Bill 164, my firm issued somewhere between 25 and 30 statements of claim in the month of January. Those are all for people who were off work in excess of 10 months, people who were unable to return to their normal activities. Those cases will, in the majority, prior to discovery be resolved with the insurance carrier that's responsible to the negligent third party. We believe it's an appropriate level because the marketplace will dictate -- I've already had insurers calling me up on 18-month whiplashes, saying: "Jay, we'll give you five thousand bucks, all in. Go away." I sit down with the client, explain the deductible, I explain they're worth $15,000 to $17,500 to $20,000, but without going to the necessity of litigation it's a reasonable figure, and it works.
Tort takes care of itself, people. All of us are trying to meddle with a system that originally wasn't a bad system. It needed to be fixed slightly, but we threw out the baby with the bathwater. It wasn't the present government that did it; it was the Liberal government, and the NDP made it worse. The Conservatives are, at this point, trying to fix it. That's okay; there's nothing wrong with trying to fix it, because it has been broken. What happened was, the original system wasn't broken; it was bent. You don't try to fix something that isn't broken. The present system is broken. The insurers are getting killed, the insureds are getting killed; it's to no one's benefit.
However, there has to be some accommodation to both sides. Part of what this government has proposed is appropriate; part of it is not. Our recommendation is, take into account the real injuries, and they start when someone's been hurt for a year. They don't start when you've been hurt and you've got to issue a claim at the end of two years and you've got to wait three years to find out if you're hurt bad enough. The costs involved are prohibitive. We have to find an equality.
I'd like to briefly mention, before I run out of time, the verbal threshold. I believe the verbal threshold should be thrown out. The Supreme Court of Canada recently, in the Peixeiro v Haberman case, stated that the verbal threshold provided that there's no certainty with regard to limitations.
What does that mean in simple English? I've got a client who comes in to see me four years after an accident. The insurer has allowed his reserves to lapse, nobody has thought anything of it, and he says: "You know what? That back injury that I had that everybody thought was a whiplash isn't. The two-year limitation period has run out, but the Supreme Court of Canada says if I just discovered that I've got this problem, I ought to have the right to sue."
That's what a verbal threshold does. We don't need it. Who cares if it's serious? The fact of the matter is, if you've been hurt for a year and you can prove it in a tort case, you are serious. The bottom line is, what does a verbal threshold do other than create more problems for the litigant, more problems for the bench to decipher it? It's unnecessary.
I urge you to reconsider. I urge you to consider the fact that the courts themselves will deal with these issues -- you've got a motion coming in this legislation which we think is absurd, and it's in our material -- but the insurer has the right to bring an application to determine whether or not this is a serious injury. It doesn't matter whether it's serious; it only matters whether it's worth enough money to pass the threshold, to pass the deductible. The verbal threshold is simply creating smoke and litigious costs for both sides.
Basically that's where, as a plaintiff lawyer, I can lay it right on the line. You don't need a verbal threshold if you set a deductible. You're double-teaming. You're creating a scenario that costs nothing but money for both sides. We want to save everybody money. We want to expedite the process. The rules of practice have just been changed so that claims under $25,000 proceed directly to trial. There are no discoveries; they move quickly. That's what we want. I'm surprised this government didn't consider having the Ontario Insurance Commission mediate and arbitrate claims under $25,000. That would certainly reduce the costs of litigation. That's not in this proposal; that's just a thought.
The fact of the matter is, this government has an impossible task, and Mr Sampson, I wish you the best of luck. You can't please anybody all of the time.
Mr Sampson: I'm beginning to find that out.
Mr Schwarz: The reality is, you've got to take into account really hurt people. We see a lot of people who are sort of hurt; we see a lot of people who are seriously hurt.
I settled a claim this afternoon over lunch for $350,000. That was a serious, catastrophic injury. I didn't have a problem. The insurance company knew what the guy was worth; I knew what the client was worth; they wrote a cheque.
Those aren't the problems. The real problems in the system are the borderlines; the real problems are the deductibles. The deductible's great, because you know what? A lawyer has to be an advocate. He has to be able to prove the cases. The insurer has these rights of examination, and again, I address the committee and advise you that we've commented on how we think they should work because the way they are now is going to cost too much money for everybody again.
We've tried to approach this on a commonsense level. This is a commonsense government and we've provided commonsense material. We believe this system can work for the benefit of all parties, provided everybody cooperates -- insurance companies working on a full-disclosure basis with advocates; advocates trying not to deceive and to move sideways and confuse, but coming straight at the insurers' advocates. It creates a system that is the true meaning and the true intent. It creates a system where there's disclosure. When there's disclosure you find out what's going on.
What you propose to do with regard to the examinations is appropriate -- sort of. We've given you some tips on how to fix it up a little. But the reality is, there has to be disclosure from both sides. What you're missing, Mr Sampson, is the insurance company's obligation to disclose to the insured. That has to be there, because without us knowing what it is we're facing, when they can do this examination on the third party and not have to give me a copy of that medical report, and I go blow five thousand bucks of my client's money fighting an insurer when he's got a med that says my client's full of baloney, what good is it? You're not helping anybody.
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What we have to do is work to a system that both sides are naked, because then the truth emerges. And that's what this all about, and that's what tort used to do, and that's what we have to find within this system.
Anyway, those are my submissions and I welcome the committee to review the material.
The Chair: Thank you very much, Mr Schwarz. You've used up your time, but the committee appreciates your input.
Mrs Marland: I wanted to ask you your fees.
Mr Schwarz: My fees are as much as the law society allows within reasonable and probable grounds. What's fair and reasonable.
The Chair: We won't necessarily count that as a question.
Mr Sampson: Or an answer.
REGULATED HEALTH PROFESSIONALS COALITION ON AUTO INSURANCE
The Chair: We now welcome the Regulated Health Professionals Coalition: Karen Lee, Moira Sonnenberg and Bob Haig. Welcome to the committee.
Ms Moira Sonnenberg: I promise I won't show up again.
Dr Robert Haig: Thank you first of all for this opportunity. My name is Bob Haig. I'm with the Ontario Chiropractic Association. With me is Moira Sonnenberg, who's with the Ontario Society of Occupational Therapists, and Karen Lee, who is a representative of the Ontario Physiotherapy Association.
The three of us are here today representing the Regulated Health Professionals Coalition on Auto Insurance. That coalition represents the following associations: Ontario Psychological Association, Ontario Society of Occupational Therapists, Ontario Massage Therapist Association, Ontario Physiotherapy Association, Ontario Chiropractic Association, Ontario Association of Speech-Language Pathologists and Audiologists and the Ontario Medical Association.
Each of our member organizations have an interest in auto insurance in Ontario. Individually, we have experience and expertise dealing with patient-clients and with the auto insurance system which can be valuable in any reform process. Collectively and individually we all recognize the need for reform. And while each organization will hold individual points of view on some things, there are a number of broad issues in the draft legislation to which we can respond collectively. We are pleased to be able to do that today on behalf of our member organizations.
The coalition met initially in September 1995 in response to the OMEGA proposal which we felt had been developed without adequate input from health professionals.
In October 1995 the coalition presented to Mr Sampson a statement of principles on auto insurance. The coalition applauds the government for its willingness to consider these principles and adopt some of our concerns and recommendations. In particular, we note the inclusion of the concept of the use of treatment plans. A copy of that statement of principles is attached as an appendix.
While the coalition and individual professional organizations have some concerns and some suggestions, the proposed legislation certainly to us appears workable, and we believe that it forms the basis for a balance between the rights of insurers and accident victims.
The coalition recognizes the concerns with respect to increasing costs of health care and rehab. Under Bill 164 the citizens of Ontario have had equal access to health and rehab benefits for up to $1 million. Inherent in this system, the 164 system, are some cost control measures. The use of these controls in Bill 164 has allowed some insurers to effectively control costs while continuing to provide effective rehabilitation. It appears that these control measures have been underutilized by some insurers and we know that you have heard from insurers who have been able to provide coverage and control costs under Bill 164.
Ms Sonnenberg: We'd like to take this opportunity to point out to the committee the controls that are inherent in the current system and the controls that are inherent in the proposed legislation. As well, we'd like to draw your attention to the recommendations at the back of our presentation, just in case we don't get to them for time restrictions.
The cost controls that are available to insurers under Bill 164 are:
-- An opportunity to request all professionals to prepare a treatment plan. There is currently nothing stopping an insurer from going to a rehab professional and asking for a treatment plan.
-- Insurers have an opportunity to regularly contact health professionals and they can obtain a flow of information with respect to treatment progress, barriers to recovery and the residual impairments and disability.
-- The insurers have available to them independent medical evaluations of diagnosis and appropriateness of treatment.
-- Insurers have the capability of referring to a DAC for an independent and binding evaluation of treatments.
-- There is also an ability to complain to regulated health professional colleges regarding practices of professionals.
Under the proposed legislation, there are numerous additional cost-saving factors.
(1) There is a 93% reduction in available health care benefits for 98% of injured individuals. As well, we have added in a stringent definition of catastrophic injuries.
(2) The insurer need not pay for treatment or rehabilitation until they or an independent DAC determine that the diagnosis and description of accident-caused impairments is accurate and the treatment plan to treat and rehabilitate these impairments is reasonable and necessary.
(3) All health professionals and other providers must prepare a detailed treatment plan.
(4) This new requirement of filing a treatment plan for approval prior to provision of services provides the insurer with all necessary information in advance, and thus they can determine if the accident in fact caused the impairments, if the impairments are of a type that can be treated successfully and whether the proposed treatment is appropriate.
(5) The new conflict-of-interest guidelines we feel have some teeth and will allow insurers to act quickly to deal with health professionals directly or through their professional colleges.
(6) Under the Regulated Health Professions Act, each college will have quality assurance guidelines and procedures. These will be binding to the members of those regulated health professions.
(7) The new DAC review committee sets guidelines for assessment and monitors the DAC effectiveness and training. DACs which are reformed, reorganized, with better trained professionals and are monitored can provide timely and effective evaluations.
(8) Multidisciplinary programs must be justified in terms of each role of each professional group. This provides a restriction on runaway treatment and bulging health care costs and can reduce duplication of service.
(9) Treatment beyond the initial approved plan is strictly controlled under this proposed legislation, unlike Bill 164.
(10) Regulated health professional fees for assessment and treatment services are restricted in the proposed legislation to published fee schedules by the OIC, unlike Bill 164 that has no built-in restrictions.
In summarizing the cost control measures, the government proposal is a thoroughly professional, well considered draft legislation that warrants some attention in its final draft. There are some particular issues that need to be reworked. However, we feel it is workable, it's fair and it presents a cost saving plan. The proposed system will reward the knowledgeable insurer without driving up premiums or abandoning the health care needs of injured accident victims.
Ms Karen Lee: I would just like to now present to you two recommendations that we believe would further enhance this proposed legislation.
The coalition recommends that the language of the draft legislation reflect a change from "medical" to "health care."
The coalition recommends that, except when used to describe the medical profession and its services, as for example in clause 15(2)(a) of SABS, the term "medical" be replaced with the more inclusive term "health care" throughout the proposed act and the SABS.
This gives the legislation greater clarity, is more appropriate and is consistent with the use of the terms health care practitioner and member of a health profession elsewhere in the legislation. It is consistent with usage in other recent legislation, and I refer to Bill 165 to amend the Workers' Compensation Act, and it is important for the injured party to realize that health care is available from a variety of health care professionals.
Our second recommendation is that the accident benefits advisory committee and the DAC committee be responsible for setting procedures, guidelines and standards for designated assessment centres, and they must have multidisciplinary representation from all relevant health professions.
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It's imperative that the decisions of such committees, and therefore the protocols of the DACs, reflect the principles of the Regulated Health Professions Act and contemporary health care in Ontario. For example, a review of management of an injured person or a treatment plan for a person must be by a health professional from the same profession or specialty, or a team of professionals, that includes a provider from the same discipline or specialty.
In conclusion, the finalization and the implementation of the new automobile insurance legislation is crucial to the citizens of Ontario. The Coalition of Regulated Health Professionals is able to continue to provide input regarding the consensus of health professions on this important issue. We are available to the legislative committee and to the government in the further evolution of the automobile insurance reform.
Mr Crozier: Thank you. Just one quick observation that you may want to comment on is "the insurer need not pay for treatment or rehabilitation" etc; in other words, access to quick response to treatment. You have said that the only exception is the modest payment within six weeks for chiropractic and physiotherapy. Could you comment on the need for quick access, even prior to the plan being in place, and how important that is?
Ms Sonnenberg: I am at risk here in speaking on behalf of a large group, and questions that may come to me I may have to check with the rest of our coalition members. I'm at risk of being pelted with --
Mr Crozier: Rather than make a mistake, you can check and let me know later.
Ms Sonnenberg: Could we do that?
Mr Crozier: Sure. That's fine.
Ms Sonnenberg: We'll record the question.
Mr Crozier: That's the only question I had.
Ms Lankin: Thank you for your presentation. I appreciate some of the comments you made in congratulating the government on taking some steps to tighten up some of the problems that were inherent in Bill 164, particularly with respect to medical rehab and the treatment plans and those sorts of things, and I agree with that direction the government is taking.
The concern I have is, this whole process is being driven of course by trying to stabilize rates. Some insurance companies are telling us that tort is going to take us back to unpredictable rates, and some insurance companies are telling us that it is the growth in medical rehab payments that have been fuelling the increased premiums under Bill 164. We've had others tell us that if the insurance companies stopped the kind of litigious approach that they take with respect to disputing treatment plans by qualified health practitioners and sending people for all sorts of multiple assessments, whose costs are included in those burgeoning medical rehab costs, perhaps we wouldn't be seeing the same kind of pressure in terms of premiums. We've had others who have said that if they just spent the time to deal with fraud, as they should in terms of good business management, you might be able to leave the benefit levels higher for accident victims.
There's a lot of mixed advice in that for the committee to try to deal through, but in terms of your perspective on medical rehab costs, what's been happening? Some measures are going to tighten it up here, but do you see the insurance companies' requests for multiple assessment and their relationship to either case managers or qualified practitioners' treatment plans as being a problem in the system, and is there a way we could try and get at that? Insurance companies call it the gatekeeper problem.
Dr Haig: First of all with respect to tort, we're not really in a position to talk about that at all. You'll appreciate that we're a coalition of a number of associations --
Ms Lankin: No, I was only asking about med rehab.
Dr Haig: -- and before we do anything, we'd have to go back to them. We can't really comment on that one.
Ms Lankin: No, I wasn't asking you to.
Dr Haig: I think it's fair to say that the approach that is being taken now, particularly with the treatment plan and the setting up of the DACs to review a treatment plan that the insurer wants to question, we tend to think is an appropriate one and is going to streamline that sort of thing. There will be a learning curve for insurers, there's no question about that, while the adjusters learn how to evaluate treatment plans essentially and make decisions on them. But it seems to us, and I hope I'm speaking for --
Ms Sonnenberg: We'll kick you if you're not.
Dr Haig: She'll kick me if I'm not speaking for everyone. It seems to us that process can work better than what exists now. But remember, we started off by saying that there are insurers, and you know them, who have been able to function very well under Bill 164 by working within that to control costs and keep their rates stable. It will be easier to do that under the new scheme, we think.
Ms Sonnenberg: Just to elaborate on that, I think there's a mutual responsibility to look at the costs. There needs to be some ownership on the insurers' perspective and there's some ownership on the perspective of the rehabilitation professionals. We're all trying to get the same thing. What we want is to rehabilitate the individual, to get them back to work, to restore their function. We're all talking about the same outcome goal. How we get there certainly needs -- I think it's very workable. If we put the insurers in the same room with the rehab professionals, I believe we're all talking the same language. We want effective, efficient medical rehab intervention with a goal towards functional restoration. How we get there seems to be under dispute.
Mr Spina: Good to see you again, and thank you for your comments.
Ms Sonnenberg: I'm not sure about that.
Mr Spina: No, it's all right. I was drawn particularly to your second recommendation, that the ABA committee and the DAC be responsible for setting procedures, guidelines and standards. Earlier today we had some submissions that talked about the control of case management. This ties in a little bit with what you were talking about with Ms Lankin, how can some interference be done or some movement be done that can involve all of the professionals? The case management they were talking about, someone has to be the captain of the process. Should it be a DAC, should it be the doctor who in most cases it is now, should it be the insurer or should it be the key rehabilitative person, shall we say? I wonder if you can have some thoughts on that.
Ms Sonnenberg: I'm really sorry. I have my own personal opinions on that matter and certainly as an occupational therapist I have some opinions on the matter but we will need to take that back to the coalition for a consensus response.
Mr Spina: Was that a heavy question? I'm sorry.
Ms Sonnenberg: I just don't feel comfortable giving an opinion that is not necessarily the opinion of all the members of the coalition.
Mr Spina: Okay. You're talking about procedures and guidelines. What would be a reasonable time length to maybe put some of those in place, in your opinion? Do you have some feel for that?
Ms Sonnenberg: I don't understand the question.
Mr Spina: You're talking about getting the committee for some procedures, guidelines and standards for the DACs that have multidisciplinary representation from all the relevant health officials. This is what you've stated here.
Ms Sonnenberg: We're ready to go. We need some direction from the minister to jump in right there and we're ready to go.
Mr Spina: And you're away, good. Thank you.
Ms Sonnenberg: Bob, did you have an additional response?
Dr Haig: No, it sounds like you did it. That's fine. I was going to take longer to respond, but you did fine.
Mr Sampson: Thank you for your presentation. One of the items we've heard a number of times so far is that we need to come to grips with fee schedules. Do you think the determination of the fee schedule should fall within one of the tasks of this committee? Not this committee; the one that the minister sets up.
Ms Sonnenberg: I certainly would feel that fee schedules set with the committee that has involvement from all the different regulated health professional groups -- my impression is, most of our professional bodies have those fee schedules in place and there are guidelines right now for our membership. Those fee schedules are available to us.
Mr Sampson: I think the dilemma though is that probably more often than not the fee schedule is not terribly adhered to as it relates to an auto claim. Is that not correct? There's some deviation from the fee schedule; should I put it that way?
Ms Sonnenberg: From the occupational therapy perspective, we've just recently done a survey. To be perfectly honest with you, it's surprisingly higher than we anticipated, and we are looking at the validity of that survey. So it's an ongoing process for us as an organization.
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Mr Sampson: But do you have any sort of difficulty with that being set within the committee structure so that we know, so the insurers have some ownership as well as the health practitioners, as to what that fee schedule is, at least as it relates to an auto claim?
Ms Sonnenberg: My understanding is that the fee schedules will have input from the committee, which is made up of the multi-disciplinary professionals, that would then have input from their bodies, so it will be fed down through the system. Then it's fairly safe to say that those fee schedules would be something that the professional bodies would be able to live with because it would be coming from them to the committee. Is that fair, reasonable?
Dr Haig: Yes. What exists now in the draft legislation is reference to a fee schedule for assessment fees and other things like that. There's nothing in there, I don't believe, with respect to treatment services, for example, diagnostic services. I'm not clear on what you're talking about.
Mr Sampson: I'm talking about the bigger, expanded picture. I'm talking about the bigger football field.
Dr Haig: I thought perhaps you were. I can't speak for the coalition in this thing. I think that it will be very difficult to get consensus between professions and insurers if it's set up so that the insurers or that committee established a fee schedule. Services tend to differ, and the reasonable and necessary title that will be applied to things -- I think you will need to rely on the associations and then the licensing bodies to determine what is reasonable from fees. I've sort of stepped out of bounds and I'm telling you that is my personal thing; that's not the coalition. Thank you.
The Chair: Thank you very much, Mr Haig. We appreciate the presentation of the regulated health professionals coalition in helping us in our quest.
ABDUL BAPOO
The Chair: Abdul Bapoo, welcome to the committee.
Mr Abdul Bapoo: Thank you, ladies and gentlemen for giving me a chance to speak here. I feel a little bit disadvantaged because I didn't really get the draft legislation to review, but nevertheless I think some of the points I want to mention will strike home to a lot of people. Certainly, myself being one of the victims of a car accident three years ago gave me a lot of insight into how the insurance industry operates.
Maybe I can just start by saying that no matter what the system is, whether it was six years ago or whether it was four years ago or whether it was two years ago, people are never going to be happy. The insurers are always going to complain and so are the insured, so we are all going to be faced with this problem no matter what. What I see sometimes, many times, is that when an insured abuses the system, it is headlines in the Toronto Star, that this man got $76,000 for an injured finger. Oh, this is great news for the insurance industry.
What about the flip side of the coin here? What about the reality. The estimates are that about 15% of the people actually abuse the system. So 85% of the people are subjected to that flip side of the coin, and what is the flip side of the coin? I'm going to talk in hypothetical terms. I just want to demonstrate some of the issues that I have faced or rather that people may face, and maybe you can make conclusions and reinforce yourselves, when this draft legislation comes through, that some things should be made mandatory as opposed to discretionary.
We've got an accident here, but according to the Insurance Act right now, regulation 668, the sole onus for fault determination is on the insurer, not the insured. We've developed a set of guidelines, fault determination rules, that took out this degree of subjectivity and hopefully was supposed to give some sort of a guidance, to say: "Yup, a fender bender. You're at fault. You hit the car at the back." But what I'm really concerned about here are the serious injuries, the ones that cross the threshold. Let me give you a case here where we've got two cars coming opposite each other, one car slides off the road, smack, bang in the front of the other vehicle, all three people are unconscious, one almost dead, the police officer comes down an hour or so later and the opposite driver, not injured, says, "Oh, he hit me," so that's what the police officer writes down and that ends up being your fault determination.
"Fault" in Roget's dictionary and Webster's dictionary -- "faultless" is defined as without guilt or blame. For the first time, and maybe it's the short time that I've been in Canada -- it's not that long, 13 years -- I am seeing guilt being defined by administrative people, where you pay first and then argue it out later. When can you argue it? If you have the intellect, if you have the knowledge, if you have the money and if you have the knowhow. These are administrative people. Are they trained? I wonder.
I have seen many cases. I was just on the phone. It's too expensive. Determination is no longer an issue here. It's become fault assignment. I would urge the committee to take that into consideration, that when they say "fault determination," they actually enforce it, determine especially for the serious and the most important ones where you cross the threshold limit.
The secondary portion is that it's all too easy for an industry that's talking to each other on the phone. You've got an industry and you've got a guy here who's really injured. The tort claim on this chap's going to be probably in the millions, or maybe in the hundreds of thousands. "Let's assign the fault to this chap." Now this guy is left on his own, provided he has all four criteria that I said: the money, the knowledge, the intellect, the knowhow, going to the right people and following through the system. He's out. He's finished. He's determined as almost guilty and that's it. His whole life is almost destroyed. An insurance industry talking to itself like this is a buddy-buddy system all the way to the bank. Something is wrong.
In 1990, when the Liberals passed the no-fault legislation, and specifically on May 20, 1990, the word "cherry-picking" came up several times. What cherry-picking meant was that the insurance industry would not choose people who are good insureds. By "good" I mean those who have collateral benefits and all the perks so that in the event of an accident they would only have to pay the excess, and the excess would be very small. Those who don't have collateral or don't have good jobs and so on wouldn't be picked. So the Liberal government passed the legislation that cherry-picking was specifically denied.
But we've got a back-door approach in this system here. We've got in an accident and we've got a faulty fault determination system. They dump you into Facility. What is that? That is exactly what we try to avoid. We put people out -- you take them in because the government's told you to, but you dump them fast.
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Now, Facility is a non-profit organization, supposedly, but it's also a non-loss organization as well. It's not out there to make a loss. So it serves two purposes here now. If we define fault arbitrarily on the phone without determination and what it meant, we can kill two birds with one stone. We can put some good drivers into Facility, and where the loss was occurring, suddenly now the balance sheet looks better.
I think a little more detailed look should really be taken into this approach, because I have seen this occur. I am presenting this as a hypothetical issue, but I think most people in here will understand what I'm trying to say and why I'm saying this.
Also, the third thing that it does is that as soon as it dumps you into Facility, we face this public concern, and we've got kids out there, 19, 20, who say: "I don't want to pay that sort of money; I'll drive uninsured." So fault determination becomes very important. If initially it's wrong, the entire system just breaks down. It just screws it all up.
I'm just going through some of the things that have been expressed to me and I'm expressing them back, and hopefully you will take those into consideration. An injured person -- and I'm not talking about just the general whiplash case here; I'm talking about seriously injured people, people with their legs cut, people with their hands broken, people with their heads and skulls broken. Transportation to and from therapy centres: Again the Liberal government -- and I have to commend that, really -- made it a mandatory requirement for the insurer that when transportation to a therapy centre is needed, they will provide it, and if there is a dispute about that, they will still provide it pending resolution. They can go to court, whatever, and resolve that matter at that point in time.
Now, there is a phenomenal economic benefit for an insurer not to provide taxicabs, because taxicabs are expensive for them. Why should they? I mean: "He's only got a broken leg or two. Maybe he can still drive. Push him. That way, we pay him 22 cents a kilometre or 25 cents a kilometre, and that's cheaper for us."
What does that do? That puts the security of life of that person in danger. It's a violation of his charter rights. Admittedly, you can't sue an insurer for violating charter rights; it's the legislation. If the legislation had intended to say to the insurer, "Yes, you can do that by tacitly approving these methods, the drive to these therapy centres," then something goes wrong here. It's a violation of a security-of-life charter guarantee, basically.
What happened in 1994? Initially, the mileage/kilometre rate was at 22 or 25 cents a kilometre per the insurance industry. That's what they were paying people. The government comes down and sets it at 15 cents. CAA, by the way, says 34 cents. Now there's even more incentive for the insurer to induce into these practices where the abuse to the insured is phenomenal. Not only does he take his life into his hands, he takes the public's life into his hands, and the insurer is laughing all the way to the bank.
Hey, what can we do about it? We'll take them to court. And that's what I'm doing. I'm going to take them to court. Do you know what the punitive damages in courts are? They are a joke. They're $10,000, $15,000. We have to put some teeth and some fairness into issues that affect people's security of life, that affect their livelihood.
The third aspect there -- some people probably can't see it -- is business practices that go on by the insurers. Of course, the first two touch on it, they're part and parcel of the business practices, but a third thing that comes in here is that there is an arbitrary decision, a relatively arbitrary decision, in many cases: "We're going to cut off his benefits. We're going to squeeze this guy." It goes to mediation and they squeeze and they squeeze and they squeeze, and it's difficult to live. You are forced to break or undermine the income tax laws, because now, if you have to have something done and you're seriously injured, you have to hire somebody on a cash bases, because if you pay the full sum and he gives you a receipt, then gee, you're going to have to pay that much, and the insurer is not giving you anything. So gee, now what do I do? So there's an inducement to break the income tax acts, to break those laws.
How do we squeeze, initiate, make him desperate, and just at the right time, when the picking is correct, make him an offer and tell him that that settles all the matters? What's the guy supposed to do? He doesn't have the money. He doesn't know where to go. He comes to the OIC, which turns him down. They don't even want to listen to him. Mr Sampson, you're aware of this. What does the guy do? But these are business practices that are being done even today. It all boils down to the cost of breaking the law versus the benefit.
I've got a sheet here that shows 20 special awards. A special award is given when a company acts in bad faith. Now this is dating right back from 1991 to 1996 and it is limited to a maximum of 50% of the amount due. It pays the insurer to engage in these practices. These awards shouldn't be discretionary; there should be mandatory fines. It's only at that time when they'll say, "We'll treat you right." And maybe they'll get a correct response from the opposite side as well. I've seen throughout my life experience that if I'm on the level with one person, I get a level response, or generally a level response, or somewhere there, but not two in 10.
Finally, we come to the issue of the OIC, the wonderful mechanism that we were supposed to have that allowed easy, quick, prompt action for the public, access where people could go and have their complaint resolved fast. What happens up there? The poor guy walks into the OIC and the insurer invariably has this high-strength, high-powered lawyer on the other side. Where is the balance? There is no balance.
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Regretfully -- and this is maybe my opinion only -- I have come to the conclusion that the OIC has almost become an extension of the insurance industry. It is not, in my view, an independent commission. Mr Sampson, you're aware of something similar, of an issue that I raised with you a week ago I think on a similar matter.
That's all I've got to say. There's a lot of emotionalism here, but I hope you'll forgive that, because it's been bottled in for a long time.
The Chair: I appreciate the emotion, Mr Bapoo. It's understandable. Thank you very much for your presentation to the committee today.
FABIO LEONE
The Chair: Our next presenter is Mr Fabio Leone. Welcome to the committee, Mr Leone.
Mr Fabio Leone: Good afternoon, ladies and gentlemen. I've got a very prime concern with the insurance industry. I spoke to Mr Rob Sampson concerning this matter here. Rob Sampson has a very good idea of the insurance industry. As far as I'm concerned, through the Ministry of Health there, I explained to them too that after seeing over 21 doctors, I have no state of mind what kind of professional doctors are out there. That's my number one concern.
Number two: Insurance companies decide to discontinue people's insurance policies -- we can't understand why -- because I guess when the insurance industry gets you in a deadend street, there's no other alternative streets to get out of. What I don't understand is why the insurance company has enough power to do these things. Right now I have so much paperwork here, which I should be handing over to the newspapers. That's the number one thing I'll be doing tomorrow morning.
The third issue: Insurance companies, as far as I'm concerned, don't protect the public. They do things on their own behalf. Whatever pleases them, that's the way they do it. But unfortunately people pay premiums to be covered just in case an accident does happen. My prime concern is that it looks like they don't do that.
You, being the Chair, I'd like you to answer my questions about why the insurance companies get away with these things and why they do whatever they want. Who gives them enough power?
In the States last year, they made over $3 billion profit. I don't know if you were aware of that, if you ever watched the documentary on that. That's quite a bit of money, $3 billion profit. I wonder what the figures are in Ontario here or in Canada. That's what I'd like to know. Maybe the public doesn't know about it. I think that the insurance companies should be, obviously, publicly run. That's the way I look at it.
Maybe the health department would save a lot of money on certain departments where they waste a lot of money. A prime example: myself, 21 doctors. But I'll tell you right now who figured out my problem: a chiropractor. Maybe they should be looked at a little bit more than just physicians.
I have a major complaint about a physician who works for the insurance industry. I'll withhold that information right now and tell it to the newspaper. But I'm sure this information will be provided in the newspaper tomorrow concerning the insurance industry. The way they are is really inappropriate. They're here to protect the public.
I have another problem with the government of Canada too. I have documents in front of me. I have spoken to the Ministry of Finance concerning this matter. I'll have nothing to do with that right now. I'm here about the insurance topics.
What I can't understand is that the insurance companies make so much money, but there's always an easy way to settle your claim very quickly, like they tried to do with me. Unfortunately, it didn't work with me, because I have a certain insurance company on misconduct and negligence on my behalf. I won't mention the insurance company's name. I'll hold that back until a newspaper gets hold of it, because it's probably not only myself but probably thousands of other clients that the insurance company wrongfully closed their cases. That's maybe why the workmen's compensation board is so much in debt because the insurance companies are too busy sending their clients back to work. Workmen's compensation, because they go back to work unattended, maybe some doctors there figure out exactly what is wrong with them. There's a lot of factors the government should look into, lots of factors.
If you send somebody back to work, he gets reinjured. Maybe he wasn't healthy to go back to work before he settled his case. Maybe he returned back to work and sustained more injuries because his injuries weren't diagnosed properly. So what happens? He goes back to work, goes to workmen's compensation, they give him a hard time. They point fingers back to the insurance company and the insurance company says: "No, you went back to work. Therefore, we've got nothing to do with you. Your claim is closed." There's a lot of factors that people don't know about.
What are you people going to do about it? Let the insurance company win all the time? Big corporations pay 4% of tax, corporate taxes. The innocent working person who tries to make a living has always a hard time. Now you guys want to raise insurance, and I don't see the point of doing that. You guys should have a scale of good drivers, bad drivers and whatever. Maybe you people should educate people the real way of driving instead.
I hear a lot of stories. A couple of months ago in Scarborough, there was a government person approving drivers' licences under the table. Did you guys let the people know about it? No. That was in a newspaper. How they got that information, maybe they have ways of finding out. I'm sure you people didn't provide the information to them. They have ways of finding it, like the ways I did it.
Like I said to the insurance company, they picked on the wrong person. I'm going to come to the bottom of all this and make sure the public realizes what the insurance company is really about. When insurance companies are making $3 billion profit, that's quite a bit of money. Maybe the government can utilize that money and use it somewhere else and create jobs and put people back to work instead of cutting people's jobs like the government right now wants to do.
Let's get together with it and figure out what the best situation is to correct the problem. Increasing the insurance companies, the policies, the premiums and all that, is not the answer, not the answer at all. You've got to make a scale and provide for the public, not for the big powerful companies so they think they have enough power to do whatever they want. Well, that's a mistake, because the public's not going to tolerate that any more.
For instance, the government now wants to cut so many jobs, 13,000 to 17,000 jobs. That's a little overdoing it, too quick, too fast, too soon. Let's say a little at a time, let's see how things go. You guys want to break everything in half and say whatever happens happens. That's not the way to go. The economy recovers by people working, people paying taxes, the money gets pumped back into the economy and everything starts going. That's when people create jobs. But cutting jobs, cutting jobs, cutting jobs --
I haven't really properly looked into the regulations of the NDP government, the previous government, but as far as I'm concerned, a no-fault person -- well, what's the sense of paying insurance? If someone gets in an accident, they sue the at-fault driver and the at-fault driver loses whatever is in his possession. The insurance companies are making all kinds of money because they give you a little settlement, you go after the other person. He loses his house, he loses his car, he loses his assets. That's not the way. The insurance companies are pumping money back into the bank and making tons of money.
I don't know if I'm going to get any answers from the Chairperson on that. Unfortunately, it's unreportable in this country the way the insurance industry is run. And $3 billion is quite a lot of money, so maybe the insurance companies should be regulated properly; bring in new legislation, change the law so that it doesn't benefit the insurance company but benefits the public itself. That's the way I look at it.
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Mr Sampson: Mr Leone, I've flipped through my notebook to see whether I had a record of our telephone discussion. It must have been over a month or so ago, because that's as far back as that notebook goes. I can't recall your individual situation and I don't want to talk to it here.
Mr Leone: I have no problem with that.
Mr Sampson: I think what you're driving at is that we need some procedures to properly deal with unfair market practices as it relates to dealing with claimants.
Mr Leone: Exactly.
Mr Sampson: I agree with you, as I think I did in our telephone discussion. We've attempted to do that. The actual current legislation has a lot of sticks in it, so to speak. What we need to do is get the mechanism to allow the regulator the authority and, more important, the ability to use them. One of the sections of the regulations we have written in says, "You don't have to wait, Mr Regulator, for a trend to be displayed with respect to bad practices. One situation alone is sufficient for you to tell the superintendent that we need to have some attention drawn to this case." As I've been saying, whack the company over the head with a telephone pole as opposed to a toothpick. We've attempted to do that, but I sense that maybe that's not far enough, as far you're concerned. Is that what you might be driving at?
Mr Leone: Yes. It's not far enough. For example, I had an ambulance January 10, and they didn't get paid until July 7. Do you know how many months that is? Seven months after.
What they do is, like the gentleman before said, they trap you, they cut your benefits, they do this. That's the tactic they use. People have no choice but to go back to work, and that is it. That's not the way to operate. There are a lot of fraudulent claims out there, but it makes it bad for the good person. Unfortunately, that's not the way to go.
I don't think anybody out there wants to get into a car accident, but things do happen in life. You can walk down the street and a telephone pole might fall, a street lamp might fall. Nobody knows. Unfortunately, that's the way it looks, and that's why the public has to be informed about all this and the public has to be set up with exactly what benefits them, not what benefits the insurance company. They make tons of money. In the States, they made $3 billion profit. Who knows what the figures are here? It could be even more. Well, not more, because obviously more people live in the States than in Canada, probably 10 times the population. But that's not the point.
The point I intend is that the public has to have more safety towards their insurance policies and they have to be covered in the proper way. Insurance companies have no right to cut you off, reinstate you, cut you off, whenever they feel like it. Maybe the insurance industry should find better doctors to work for them. That's the way I look at it.
There are a lot of names I could mention right here, but I won't do that because it's a private conference here. I'm going to have to give this to the newspapers and let them run the story on it and maybe the public will be more alert to what exactly the insurance industry is all about.
I'm going to make sure 100% -- if I have to bring 50,000 petitions here, I will do it. Believe me, I will do it. I'll go to every doctor's office in Ontario and ask them: "What are your injuries? Are you satisfied with your insurance company?" I guarantee you that I'll have so many signatures that it will be unbelievable. A lot of people out there I talk with are very displeased with the insurance industry, and something has to be done about it -- very serious stuff.
Life is short. Nobody has the right to be in a wheelchair. Nobody has the right to have a cane. Nobody has the right for all that. You prevent injuries that could get serious, not just say: "Okay, close the book on this client. Send him back to work." That's not the way to operate. You have to operate the proper way, the civilized way, not that the companies go to the bank and deposit big cheques and thousands of dollars and do whatever they want.
I think that's it for me. I don't have much else to say.
Mr Kwinter: I would like to address what you've said. There's no question -- it's one of the major problems, and I think you're a prime example -- that there's got to be more education of what insurance is, how it works, what the rights of the insured are, what the rights of the insurer are, because there's a lot of misinformation.
Mr Leone: Yes, there is.
Mr Kwinter: With all due respect, the amount of money they make is not the criterion; it's their return on investment. I've said this before in other venues. An insurance company could make $3 billion, but they may have invested $100 billion, so that $3 billion is a terrible return and your shareholders will be very unhappy.
Mr Leone: I realize that, but the difference is, if they're reinvesting into the economy maybe they should invest in a human being, okay? Life is short, like I said. He might be able to stand up today, but tomorrow he might wake up in a wheelchair. Those things you have to look at.
This is a perfect example, since you brought this up: rehab clinics. Why don't the insurance companies provide proper rehab clinics and proper doctors if they make so much money and reinvest it into the economy? Why don't they hire proper doctors? Why don't they have special facilities? As far as I'm concerned, hospitals should do rehab, not just a rehab like a variety store. There's a variety store on all four corners of an intersection, right? That's what happening with the rehab clinics, and rehab clinics are making a lot of money too. You have to get proper rehabs for people to get healthy and people to get back to work. That's why the health system is so much getting drained and getting drained, and workmen's compensation is getting drained and getting drained, because they hurry to pump them through.
You said the insurance companies pump in money. Why is workmen's compensation so much in red tape? Do a workmen's compensation investigation and see how many insurance patients have had to go back on workmen's comp. Maybe that's why there's so much money being missed out of workmen's compensation, because workmen's compensation is picking up the tab for the insurance companies.
Ms Lankin: I really want to thank you for coming. A number of other accident victims have expressed their actual experience with a company. I appreciate that you're talking at a more macro level in terms of some of the problems in the system. It seems like the companies are getting a return on it, the rehabs are getting a return on it, the lawyers will be getting a return on it, but the accident victim is having a lot of trouble in terms of restoration of quality of life and getting the return on the contract that they contracted for by paying premiums.
I wanted to ask you about your reference to the Ontario Insurance Commission. They're a regulatory body, and you said you thought they were becoming like an extension of the insurance industry and that there was no ability for you to get any satisfaction in going to the OIC.
Mr Leone: I was very unsatisfied with them.
Ms Lankin: Could you explain that to us? Except for the previous speaker, whom we didn't get to ask any questions, we haven't heard much about the OIC and its role interacting with members of the public.
Mr Leone: Going to mediation is just a standard thing. The insurance company's in front and you're at the other side of the table, and you have the lawyer there. What they do is they make you an offer of a settlement, okay? The settlement they made to me, as far as I'm concerned, was really pathetic, and that's what really got me angry. Lawyers are supposed to represent their client. I don't know how many lawyers represent their client or work with the insurance company; I can't answer that. Sooner or later I'll probably look into it, but right now what I don't understand is that you hire a lawyer and he works on your behalf, and he charges you, let's say, $100 a month for correspondence, photocopies and this and that. How many photocopies do you do? How many conversations over the phone do you do? They're the lawyer; you don't like doing the work for them. They like to do it for yourself.
I'll give you a prime example. In 1987, I believe, I was involved in two car accidents. This lawyer here closed the second case before he closed the first one. How he did that, I really don't know. He closed the second case before the first one. In my common sense, you close the first case first and you keep the second one open. But he closed the second one first and closed the first one after. That's another factor that the government has to investigate and do what's best for the public.
I think the best way to regulate all this is government-run. That's the only way I look at it. You put more people to work in the government and you get more satisfaction. Believe me, the public will really appreciate doing it that way. A lot of people are frustrated with their insurance company, lots of them. What's this nonsense here, raising the insurance 18%, 16%? That's nonsense, because the good driver pays for the bad driver. Accidents happen, no doubt about it. Accidents happen. You can walk down the sidewalk and trip over a bottle or whatever. Things do happen, but you pay insurance to be protected in case something happens. As far as I can see, in my own case, it didn't work that way, and thousands of other cases. I'm here not only on my behalf; I'm here for the public too. I have a very prime concern about the public, and I think the only way the public will be happy, like I said earlier, is to be government-run.
The Chair: Thank you very much, Mr Leone. As we move towards decisions in the insurance industry, we will take into consideration your presentation today.
Mr Leone: I appreciate it. Thank you for your time.
The Chair: The committee will take a 20-minute recess.
Ms Castrilli: Is the next person not here?
The Chair: The next two people are not here. We will reconvene at a quarter to 6.
The committee recessed from 1724 to 1741.
TOM DAVID
The Chair: We welcome Tom David, of David and David. Welcome to the committee.
Mr Tom David: Thank you very much. Let me introduce my background a little. I'm a lawyer. My practice is restricted to personal injury. I've been practising personal injury law for over 20 years now, and during that time I've dealt with many thousands of cases and I've been in many trials as well. As such, I've had occasion to meet many people who have fallen between the cracks as a result of their circumstances, circumstances that were beyond their control and circumstances for which they were not at fault. It's for that reason that I'm here.
A lot of the criticisms I would have for the legislation have probably been adequately presented by other lawyers and other people before me, such as Lawrie Mandel. I'm going to restrict my submission to a couple of small areas.
In respect to the verbal threshold and the deductible, my submission is that the verbal threshold is just another opportunity to cause confusion. If the purpose of the threshold is to get rid of the small cases, the small injuries and the ones that are more of a nuisance value, the deductible certainly does that.
When a lawyer takes a case, he does so on the basis of how much he feels he could get in court. The insurance adjuster will pay according to what he feels a court will give. If the argument is that by giving a deductible, the lawyers will simply say, "If the deductible's $15,000, give me $20,000 because I want $5,000 clear," it doesn't work that way.
If the deductible is $15,000 and I feel as a lawyer that I won't get $15,000 in court, there's no way on earth I'm going to touch that case, nor would any other lawyer. It's a business, and they won't do it; you can't have a client pay for that sort of service where they're going to get nothing out of it. Going to court is expensive. Making a claim is expensive. It means having to put a lot of money up front, and most personal injury lawyers will do so on their own. We usually spend many thousands of dollars in pursuing a claim. We won't do it if there's nothing at the end of that claim.
By keeping the deductible, you've eliminated all the minor cases, you've take a lot of confusion out of the system, you've eliminated the need for insurance companies to test in each instance whether this verbal threshold has been met or not met.
I'd like to say a little more about the deductible. When you make the deductible $15,000, what you're talking about is, is a jury going to give $15,000 or more? Jury awards have been fairly stable over the last probably 10 years. I haven't seen much increase in them. A one-year whiplash is worth anywhere between $5,000 and $10,000 for pain and suffering, a two-year whiplash is worth anywhere from $7,500 probably to $12,000, and that's it.
If your threshold, as an example, was $7,500 or $5,000, most lawyers would not take that case if it's a one-year whiplash because they could get shut out. Nobody's going to court if they get shut out. A $15,000 deductible represents the middle of a range. If something's worth $25,000, a jury may very well come back with a $15,000 award. No lawyer or sensible person will take the risk of going to court for that money. It's just not worth it.
The insurance adjuster realizes that, as does the defence lawyer. They will not give in on that; there's no point. Each side knows what a jury will reasonably give and each side knows when the other side is going to bluff, and they simply won't go with it.
When you're giving a $15,000 deductible, in reality what you're doing is setting a $25,000 threshold, because cases worth $25,000 are on the borderline of whether somebody will risk actually pursuing that claim. Nobody takes a claim on the basis that they may give it up after spending a couple of thousand dollars on medical reports.
My first submission is that the verbal threshold be eliminated; that a deductible is sufficient to eliminate the small cases, and it will save a lot of court time. My second submission is that the $15,000 is excessive, not only in itself but because you have to take it in context of the effect it has on the plaintiff community, that in effect you're stopping claims that may be involving three years of pain and suffering, or more.
In Mr Sampson's speaking notes that were handed out, on page 5, it says, "To ensure this auto insurance system doesn't create significant additional cost to the public purse, our proposals would enable the government to recover from insurance companies a significant portion of the public health care system cost for people injured in automobile accidents."
One of the costs to the public purse, and a major one, I submit, is people who slip between the cracks, people who can't meet their mortgage payments because they've been cut off by an insurance adjuster who can do so simply because the insurance company says that's what you do. You don't need medicals. You simply say: "That's it. You're not getting any more treatment; you're not getting anything more. We're sending you to a DAC, and that's it."
People slip through the cracks. They don't pay their mortgages, they get foreclosed. You have to understand that the people who are injured are usually suffering from severe depression as well as the pain. One of the first things I've always told my clients when they come in, as a husband and wife, is, "I'm not a psychologist, but I could tell you that you may find some tension." Frustration thresholds become very low and what you find is arguments. One spouse, who doesn't understand what's going on, resents having to do all the work of the other spouse.
People fall between the cracks because they have nothing to look forward to. They don't see an end. They're not going to get back all their moneys. They're getting cut off early. They're losing their house. They're getting divorced. They're not getting the rehabilitation that they're supposed to be getting under the insurance plan. These people are the ones who are going to go on welfare, and they will be the burden of the public. These people are the ones who are going to develop the chronic pain syndromes that you see, which some people discount but are very real and are very much supported in the medical community. These people will be a burden on health care because they will go and use those facilities far more than I think this legislation anticipates.
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When you cut people off from rehabilitation, you cut people off from benefits and you intercede into their life more the accident itself has, then you get these problems. It's one thing when you know that after four or five years you're going to get this money. It's another thing when you see that the system appears to be stacked against you. I believe this legislation helps create that sort of situation.
I think the insurance companies have far too much power in terms of discretion. My submission is that it's unreasonable for an insurance adjuster with grade 12 education, perhaps his second day on the job, simply to cut people off at will because that's what the insurance policy is.
I'd like to mention also about the DACs. I hope that it was misstated in the Law Times I was reading this morning where they said that there was a proposal that the DACs be binding. If the DACs were binding, I think that would be the greatest tragedy of all the different things that I may have found in this legislation. The DACs generally are composed of doctors who have been involved on the defence side over the years. Doctors have become very politicized; they take sides. They've learned to do that over the years. There are doctors who are actively engaged in litigation medicine and those doctors have had their own little blinders on. You can't help but have that happen if you're doing one side predominantly over five to 10 years.
I say that because the doctors I've encountered in DACs have predominantly been doctors who have been on the defence side over the years in the trials I've been involved and are still in court on the defence side and probably -- I'm making a guess here -- 30% or 50% and sometimes 80% of their income is dependent on insurance companies and insurance-style lawyers.
Medicine is not a science, it's an art. Rheumatologists, for instance, are quite convinced that there's a syndrome called fibromyalgia. There's a court in BC or in Alberta where, based on the evidence, a judge decided no. I've had a recent case of fibromyalgia and the jury awarded $650,000 for it. It's something that's real.
Doctors can easily take one side; it's an adversary system. They can easily hang their hat on which hook they decide best suits them or which side they're politically inclined towards. It's easy for a doctor to say there's nothing orthopaedically wrong with a person because there isn't, it's a soft-tissue injury, but that's what defence doctors do. There's nothing orthopaedically wrong; they muddy the water. I'm not saying they're lying; I'm saying that they're presenting a view which I consider perhaps distorted, but they're presenting their view. DACs tend to do this. I think it's very dangerous the amount of power that the DACs have and I think that if you want to have a DAC, one of the criteria should be that they not take on any other litigation work outside of the DAC, so that their future isn't dependent on the insurance companies giving them business later on.
I handed out a letter that I just saw on the desk of one of my associates today. It's from Health Recovery Clinic. This is where the premium dollars are going. This is for a disability assessment; it's a DAC. My client, who has no psychological problems that we're aware of -- certainly we're not saying that he has any or is advancing any -- has to see a psychiatrist for three and a half hours, then a physiotherapist, then a medical doctor -- who I think is an orthopaedic surgeon, but I'm not sure -- then a kinesiologist, and again a kinesiologist a different day. This cost, I venture, a minimum of $5,000 to $6,000. That's where the premium dollars are going.
I settled a case recently where a psychiatrist put in a 61-page report -- 61 pages. The average cost of a page is about $125 to $175 for a medical report. He then followed it up with seven further reports commenting on various other matters that the lawyer asked him about -- an average of three pages each. We've got 85 pages approximately of very boring reading material that's costing the people who pay premiums a fortune. They're trying to stack the deck by putting in as much as they can, thinking volume and weight make some advantage over perhaps quality; and sometimes it does, unfortunately.
I submit that DACs, if they play any role, should play one where the person doing the assessment has no conflict by way of future business, not only in respect to the individual, but in terms of future business from the industry. Secondly, it should be of this nature where the insured is paying for this type of $6,000 DAC; it should be limited. If you put a cost on the DAC that you're allowed to charge, then the insurance companies won't be complaining as much about how much money they're losing.
Those are my submissions. Are there any questions?
Mr Crozier: I just wanted to have you expand just a little. I suppose no matter what we do, they're going to have people fall through the cracks.
Mr David: Absolutely.
Mr Crozier: This seemed to be initially what you were concerned about. Then you went on to address some other problems. But are there areas of the legislation that you feel you would like to recommend to us that prevent that kind of thing, or was it just a general statement that it'll always be there?
Mr David: There are a number of things. One is, don't let an adjuster arbitrarily decide that they're going to cut somebody off and, by the time you get your DAC report, which may be six months later, find out that maybe he shouldn't have been cut off. By that time, it may be too late. A lot of the family could be broken up by that. I may seem to dramatize it, but unless you've been personally injured -- not only a scrape or something for a day or two, a headache for a couple of days, but when you've been suffering, day in, day out, for weeks and weeks, it gets pretty traumatic.
Ms Lankin: Thank you for your presentation. I don't have a specific question. I appreciate some of the issues that you've raised with us. I'm one of those people who has a problem with the issue of tort, but if there's going to be tort, I think you've raised some very important concerns that the government will need to look at.
I also think, if I may say to Mr Sampson, that issues around the independence of DACs and those relationships are important. I don't know the safety mechanisms that are in place now, but those are important things to pursue.
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I was wondering if there is any way we might be able to get some information, either through the Ontario Insurance Commission or perhaps from companies directly, about the proportion of their accident benefit or med rehab costs -- let me put it that way -- that are actually taken up by insurance-company-requested assessments. I know that this is an important part of the system, but we have heard much from many people about abuse and the costs that are attached to that and that that is a contributing factor to increasing med rehab costs, which the insurance industry identifies as the biggest contributor to increasing premiums. It would be interesting, and if there are no mechanisms to get that, we might consider in legislation the ability to compel that kind of information to be filed, because I think where you have this intersection of publicly mandated insurance and therefore government having a role in trying to define the product to ensure stability in premiums, I'm sure feeling, as a committee member, without sufficient information to be able to judge the accuracy of information presented to us by the industry with respect to the elements going into increasing costs.
The Chair: Could we discuss this at the end of the day in order to avoid taking up Mr David's time?
Ms Lankin: It's just a request that I'm making for information. If it can be met, I think it would be helpful to us; that's all.
Mrs Marland: Mr David, I just want to be very clear. I know I can re-read in Hansard what you just said, but we're not able to get Hansard for some time, so I want to be very clear on this letter that you've given us dated February 1, that what you're saying is that your client was referred to all of these appointments --
Mr David: Yes, will be. February 28, 1996 -- next week.
Mrs Marland: -- was referred for all those appointments by Elaine Ruegg of Liberty Mutual. Mr Clerk, this becomes part of the committee record, doesn't it? But there weren't seemingly any of those kinds of problems with your client? Is that what you said?
Mr David: There's no indication. I asked the lawyer who's in charge if our client has any psychological problems or if we're advancing any, and he said no. There were no psychological problems, so the first person who meets him is a psychologist. The psychologist is there for a very good reason. He's there to say that the client's a malingerer and that he's not bona fide; that's why they want a psychologist.
Mrs Marland: Is it possible that this hierarchy of appointments is established by everyone trying to protect any further suit down the road? "Well, we did look at this victim and everything was fine," so the assessment was made. Because the reason that I'm asking that question is, we've heard from so many representatives of brain-injured victims that a lot of the condition isn't always -- I mean, the cognitive ability or the cognitive impairment, whichever way you want to express it, doesn't show up initially or sometimes some of it gets better and sometimes some of it gets worse. So I'm absolutely floored if these appointments are set up without any clinical indications that they're necessary. That's a point that I will pursue with the insurance companies.
Mr David: The psychologist is there to show that he's a malingerer, that he's not bona fide. That's why they put him there. That's my belief.
The others -- the physiotherapist, the kinesiologist and the doctor -- are there for the function. Normally, kinesiologists work under physiotherapists. Remember, DAC is a very big business; it's a lot of money. I understand that they're charging $800 just for the administration fee for setting this up. If you're getting $6,000 -- if you can make it three to five days long, then you'll do so. If the insurance company says, "Fine, let's do it, because that way we can stack the deck more," then they're happy also. So they pay and they receive. They're stacking the deck, but is that cost necessary?
One DAC that a client of mine went to said, "Everything's fine." We sent her to an orthopaedic surgeon. She had a frozen shoulder. A frozen shoulder means that your muscles are wasting away. If she doesn't get therapy, it gets worse and then she becomes more likely to be a burden on the public. This was a DAC. Frozen shoulders are not that hard to find and they said that she was able to work. Now, that's one where I was considering suing the DAC for negligence, but of course there were no damages because we discovered the frozen shoulder right away. The physiotherapy centre, rather, where she was going said: "This is ridiculous. This woman has a frozen shoulder." So I said, "Let's get a doctor to send her to an orthopaedic surgeon to verify it," and he did.
The Chair: Thank you, Mr David, for presenting to us today. We certainly appreciate your input.
BARRY BROWN
The Chair: Our next presenter is Barry Brown. Welcome to the committee.
Mr Barry Brown: Thank you for having me. My name is Barry Brown. I'm not a doctor, I'm not a psychologist, I'm not a psychiatrist; I'm a social worker. We work with families. I have a clinic in Toronto. We've been here for 14 years. We work with the families of personal injury victims.
Some years ago, during presentations for the last bill that came through regarding motor vehicle insurance, I presented to the committee my concerns. At that time I wished to relay that unless the family was seen as the victim, rehabilitation efforts would be undermined. It was very clear to me at that time that not only does the victim suffer, but family members suffer as well. There's been significant research into what happens to the spouse of a personal-injury victim and children: clinical depression, the disintegration of families. It was very key to me to be able to relay that the family must be seen as the unit to be treated, to be assisted.
I was assured by the individual sitting in that chair that the family qualified as the insured and that rehabilitation efforts could include the family. I was pleased. I understood that if there was a dispute as to whether or not a family warranted assessment and counselling, the mediation process would be swift and impartial.
These few years later, desperate families on the verge of emotional collapse, where a family member has suffered significant and objective injury -- I'm not even talking about soft tissue; I'm saying where things are broken, where people are unconscious -- are referred by their doctors and/or treating psychologists and these people are routinely, automatically refused counselling intervention for reasons beyond my understanding.
Today the majority of families that I come across, suffering from emotional upheaval, must regularly wait months to access the mediation process because an adjuster is able simply to say no with little to no logic, little to no reason. I have asked specifically when I received a no: "Could you please assist me to understand your logic? What are your reasons?" "You have access to the mediation process." "Off the record, what are you seeing in this family that I'm not seeing? I have a medical referral from a physician I don't know from Sunnybrook hospital; both spouses were in the accident. What am I missing?" "You have access to the mediation process." I don't understand.
Chronic pain, head injury and spinal cord injury change people, change them dramatically and negatively, and these people have husbands, wives and children. People, your family member or members, are transferred into disabled and/or angry and/or aimless individuals you can hardly recognize. Certainly, they are people their family hardly recognize. Anger, withdrawal and isolation are common. Without assessment and counselling intervention to help families understand what has happened to them, families disintegrate, leaving no support for the injury victim and undermining rehabilitation efforts.
The family I just spoke of -- a husband and wife in a motor vehicle accident, together, T-boned in a car accident, red light, not their fault -- are being sent to physio, are being sent for help to address their physical pains. They have soft tissue damage, migraine headache pain for the wife. The family was referred by their physician; I don't know the physician -- Sunnybrook hospital.
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I met with the family. I sent a letter off to the insurer stating the family's been referred. I'll do a brief assessment and likely a brief treatment. What we found was that they were continuing to address their employment with heightened frustration because they couldn't be who they were; the pain was distracting: migraine pain, shoulder pain, neck pain, back pain. They would manage their employment and they would come home and vent on each other.
They were coming home for respite, for solace, and they found instead their spouse in as much of a mess: lower tolerance levels for frustration, venting upon one another, heightening stress, heightening agitation, heightening frustration, heightening pain, withdrawal and a collapsing of their relationship. They didn't understand what was happening to them. It was a simple process. They needed a number of sessions to help them understand what happens to people in a car accident. Yes, you look the same, but you're not the same. You're getting help and it will take time.
The family was educated. The couple were educated. They were helped to address their frustrations and pain in a more purposeful fashion. They were helped to be supportive of each other, even when they had less energy. That's a solid marriage again.
A brief report was sent off to the adjuster, who simply said: "No. Not addressing it. Won't cover it." "Just a why?" "No why." I don't understand.
Another family, 17 years of marriage, 17 years of working, this couple, 14-year-old daughter, an adored child, contributing citizens -- she has a car accident; she's unconscious for three days. She broke a number of bones. This is not a "maybe"; this is for sure. She can't work. She takes pride in her ability to interact in society in a gainful fashion. She starts gaining weight, she despises that and she's ashamed. She's in a lot of pain. She's withdrawn from family; she's withdrawn from friends. She's not out in the world any more.
This is an upset, pained and angry lady. Her daughter goes to work, her husband goes to work, they come home and she vents her frustration on them. She's not going to yell at a tree or at a wall, she yells at them. After approximately two years -- I hadn't seen this family yet -- her agitation and her frustration, her stress level and her pain level were of such intensity that on one occasion, with little provocation she lashed out against her daughter, damaged her, bruised her. The school called the children's aid society, the children's aid society and the police attended at the home. The mother was arrested and the child was taken away.
We were referred this family. The child is now back with the mother. The mother was charged, found guilty and is presently on probation. I contacted the insurer and I explained my understanding of the circumstances. The adjuster said: "Wait. We're waiting for an IME. We don't want to authorize family counselling; we're waiting for an IME."
This child is devastated and the husband watched this happen. This mother is emotionally destroyed. What in the world is an IME going to do for this family? An IME will likely, in this case, be conducted by a physician, presumably an orthopaedic surgeon, a bones individual. This family is emotionally eroding. "Wait. Don't help them yet." This is absurd. The adjuster can say, "Wait," because they can say, "Wait." They can say no because they have that power. I don't understand. I asked, "Wait for what?" This was an adored kid. There was no police history prior; there's no history of CAS involvement prior. These were contributing citizens. These were normal people. I don't understand.
Families must be seen as the victim and counselling must be made available, with proper assessment to determine if the damage in the family is resultant of the injuries. This must be offered without constant and regular obstruction. Families are central to our society and they must be protected and they must be supported.
Regarding this new legislation, in general I support it. However, I do have some concerns. My first concern is, as you might have guessed, that there must be some safeguard to protect against the automatic gamesaying of no. I'm not a legislator, I'm not a lawyer; I work with unhappy families. I sometimes joke that they call my practice Misery 'R' Us, but their misery is real. If a family has a right to assistance, it should be there.
I have a concern in this proposed legislation regarding the 30-day notification. A family, following a personal injury, will be in the stage of hope. Everyone draws together, they're focused or they're praying; they won't know what they're looking to down the road. They can't apply for family assistance as they rally around the victim. That won't come out for at least a year.
DACs are, as I understand, for the most part taking the place of the mediation process -- an employer -- to ensure that DACs are aware of what a personal injury can do to a family, and a family expert will be on the DAC a family is sent to. There is no point in addressing a family matter with an orthopaedic surgeon. The family must be seen as the victim. If you want to rehabilitate your victim, help the family understand what has happened.
Third, in the case of death, as I understand the proposed legislation, there isn't a component that allows for counselling to assist the family to understand what has happened with the loss of a family member, to help them grieve, to help them restructure, to help them regroup and carry on. It's responsible and it's moral that counselling is also offered in the case of death.
I had a stack of files on my desk that I wanted to address with regard to this presentation but I figured being succinct would probably be more purposeful. I will leave my presentation with a little bit of redundancy. If you want to assist a personal injury victim, if you want to bring a personal injury victim back into society, you must see the victim as the family, the family as the victim. Make help available without undue stress. Thank you.
Ms Lankin: Thank you very much. You have brought an issue to us. This is the first time in these hearings that this issue has been raised and is one in which, as I listened to you speak, it's so obvious and so easy to understand the need that you describe.
Yet, I can imagine the response in terms of some of the insurance companies. I had a bit of an experience when I was in the Health portfolio. In this case, it had to do with treatment for addictions and the development of an understanding of co-dependency and treatment of co-dependents, family members, around that and huge costs all of a sudden coming into the system with this new understanding. It seemed very reasonable, then all of a sudden we realized there was also a business being run here; in many cases these were referrals to US clinics that were making money off the Ontario health care system.
Every time you start to understand a problem and start to peel the layers from the onion, new problems come out around it. That's not a reason for us not to address the problem you raise, but I guess what we're seeing is the response from the insurance industry, worried that this somehow is a new trend or a new cost.
I'd be interested if you have any insight into why they're so hard line on this, though. It doesn't seem to me easily to be an area that is going to be exploited. Why would families put themselves through going to counselling if it wasn't necessary and/or related to the events they were experiencing? There is still such a stigma in our society that many people would avoid that. I can't see it as an area for potential abuse, but I'm wondering why the insurance companies are seeing it that way.
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Mr Barry Brown: One, they can if they choose. Two, more poignantly, they don't understand. It's a lack of education. And three, there is a lack of understanding that to have a family on board, to have a family understand, will allow rehabilitation efforts to proceed with greater efficiency.
There is just a lack of knowledge, I think. I don't think insurance adjusters are out there to undermine people or families. There is an awareness, I think, within the adjusters' community that too many are fakes, but as you point out, who is going to come to family counselling to get a few extra bucks?
As I was stating, I don't understand why they say no, and sometimes with so many obvious indicators illustrating a family is disintegrating, when the law says they have a right to help. The bottom line I guess is I don't know. Education, I hope.
Mr Spina: Thank you, Mr Brown. As Frances indicated, it is the first presentation from your particular viewpoint and it's a welcome one, an interesting one. I wondered if some of the DACs, some of the processes -- Mr David brought it up in the last presentation where there was a psychologist who was part of that particular DAC team, and Mr David indicated that, in his opinion, that was to determine whether the victim was malingering or not, but I'm wondering if that element of the DAC, a psychologist, would be able to recognize the social changes that take place in that person's psyche and refer them to you. Is that not happening?
Mr Barry Brown: A psychiatrist, as I understand, for the most part is trained to look to the individual, past-related issues that are having negative ramifications in the present. Psychology has a great strength in testing and determining personality profiles, of putting together treatment programs for that particular personality profile. If a psychiatrist or a psychologist is, one, trained to deal with families, and two, has a mandate to look, those individuals can be invaluable, if they're looking.
I'm a social worker. My area of expertise and where we focus in my clinic is the family. That psychologist may have been of monumental assistance if he/she was looking for more than just how was that individual functioning, personalitywise. I think for the most part the rehabilitation community does not look to family as a focus. When you walk into your doctor's office and your arm is broken, your doctor is going to look and address the issue and will rarely ask, "How are things going at home?" You can be fit to explode with frustration, but if you're walking with a broken arm, that's what's going to be addressed. As I say, the helping professionals for the most part focus on the injury victim, with little awareness of what's happening outside of the specific injury, unaware of the relevance of the emotional ramification to the family and from the family on to the victim.
Mr Spina: So how specifically do you think we should address this?
Mr Barry Brown: If family is important in our society, and it is, and if you want to responsibly address rehabilitation, the matter of family is important to be put front and central to the helping professionals. I've spoken to numerous, numerous rehabilitation facilities and they ask me: "How do you find out? We're not social workers. We're not therapists. How do you find out if a family is doing okay or not?" I say, "There's a very unique process. It takes a lot of training, but I think I could teach you. You say, `How are things going at home?' At times you'll hear, `Not bad, thanks; it's stressful but we're managing,' and other times you'll get a torrent. They'll start crying and flailing," not flailing necessarily, but at times. "Ask." "But we don't." We do.
Mr Kwinter: Thank you very much for your presentation. I find it interesting. I think somewhere or other we have to step back.
You were saying one of the things that you were concerned about with the DAC is that if the family appeared, they may be confronted by an orthopaedic surgeon as opposed to someone who can deal -- you felt that someone on the DAC should be a social worker, someone who could deal with the family.
My concern is that from what you are saying, in most cases the family wouldn't even be referred to a DAC. The insurance company would be looking at the particular person who had an accident, would be addressing, as you say, if it's a matter of a skeletal injury or a soft-tissue injury and send them for that, but they wouldn't get the family there. I think the big problem is, how do you identify that at that stage, at the stage when they're going to the DAC, and how do you get the awareness to the point where the insurers will in fact take that into consideration?
Mr Barry Brown: I guess the last part is the most important. Myself and my staff speak to different groups as regularly as we can with regard to identification. I identify to the adjuster the problem. "You'd have to be blind to miss this particular problem regarding that particular family." "Police and children's aid for this family? This is horrendous." The adjuster said, "She's going to be DACed March 3rd or 4th," in a letter. I've written a letter in response noting that I hope that whoever is DACing this woman will address my concern for this family. We'll see what we hear in response, but I really doubt it.
The public doesn't know that the family suffers and that family matters in rehab, and insurance adjusters don't know. We're doing what we can to educate. As a number of you have pointed out, I am the first one who has spoken on family, and it's a sad state of affairs when after how many days, three days, I'm the first one. But I'm glad I'm one. It's important.
I don't know how to share this very important information with those who are in control. I'm not a legislator. We work with families. We do what we can to help those that come through our door. Even those that come through our door we can't help at times. I think it's immoral that that is possible.
The Chair: Thank you for your presentation, Mr Brown. We appreciate your perspective on our deliberations.
The only outstanding piece of business is a request for further information from Miss Lankin. Is there any discussion, or is there general agreement on the cost of DAC, I think, the cost of assessments?
Ms Lankin: Yes. I'm just requesting this as an individual member of the committee. If it is possible, I think the information will be helpful for the committee, if it's understood.
Mr Sampson: Do you want to clarify what it is you're looking for?
Ms Lankin: What I'm asking for?
Mr Sampson: Yes, because if it is what I think you're looking for, you're going to find it difficult to find. But we can ask.
Ms Lankin: Yes. I'm sure it's going to be difficult to find. What I have been hearing is the insurance industry saying that under Bill 164, and even previously, the trend of the fastest area of increased cost is for medical rehab cost, and the response that they ask for from government is to reduce benefits in that area and to put tighter gatekeeping controls in. We all recognize that there are some issues there that need to be dealt with to have more efficient use of these resources, but we hear from others coming forward who have had experience, either representing as advocates on behalf of accident victims or accident victims themselves, their perception, at least, of an extraordinary amount of resource going into assessments and reassessments and second and third opinions. At some point, it would be interesting to try and get at how much of that is helpful in terms of the gatekeeping role versus how much of it is actually contributing to the pressure in increasing costs in medical rehab and therefore pressuring higher premiums.
I suspect that that information is not easily available in the public domain. It would be interesting to try and get the insurance companies -- even if it's not in the context of this draft legislation but as you set up your task force and you work through these issues -- to get a more honest assessment of that, because it strikes me that the balance that you eventually want to reach in that area really needs to be informed also by this behaviour of claims management, excessive claims management, that we're hearing about.
The Chair: This request for information is from the insurance industry, not necessarily from our research staff?
Ms Lankin: If it's available. Anything like that that is available through the Ontario Insurance Commission or whatever, our legislative research staff might be able to access that. I guess I'm also asking perhaps if Mr Sampson might be able through his ministry officials to request the insurance industry to respond to some of these matters. It may not be possible to get the information, but it is an important missing piece, I think, in trying to get to the bottom of this.
Mr Wettlaufer: I think the information might be available from the Insurance Bureau of Canada. They gave us figures today or yesterday, that case management costs have risen by 40% to 50%. If they've broken that down, they may also have these figures.
The Chair: Without any objection then, I would ask our research staff to see if they could track down some of this information.
Ms Lankin: Okay. Thank you.
The Chair: There being no further business to bring before the committee, we stand adjourned until tomorrow morning at 9:20.
The committee adjourned at 1831.