AUTO INSURANCE
ONTARIO MEDICAL ASSOCIATION
ARBITRATION AND MEDIATION INSTITUTE OF ONTARIO
ONTARIO COALITION OF SENIOR CITIZENS' ORGANIZATIONS
CANADIAN ASSOCIATION OF REHABILITATION PROFESSIONALS
INDEPENDENT DRIVER EDUCATORS ASSOCIATION
MARC MENARD AND ASSOCIATES / ABILITY MANAGEMENT CONSULTANTS
NORTH YORK REHABILITATION CENTRE
ONTARIO ASSOCIATION OF COMMUNITY-BASED BOARDS FOR ACQUIRED BRAIN INJURY SERVICES
COLLEGE OF CHIROPRACTORS OF ONTARIO
ACCIDENT RECOVERY PHYSIOTHERAPY
CONTENTS
Thursday 22 February 1996
Auto insurance
Ontario Medical Association
John Krauser, associate director, health policy department
Ted Boadway, executive director, health policy department
Dispute Resolution Services
Cliff Hendler, president
Bruce Robinson, associate
Arbitration and Mediation Institute of Ontario
Patrick Bowles, chair, insurance section
James Pesando
Ontario Coalition of Senior Citizens' Organizations
John Kruger, member, chair of senior citizens committees
Canadian Association of Rehabilitation Professionals
Joanne Gram, president, Ontario
Independent Driver Educators Association
Sohanlall Racktoo, vice-president
Kingsway General Insurance Co
William Star, president
Marc Menard and Associates/Ability Management Consultants
Marc Menard, president
Peter Kormos
Geoffrey Lloyd
North York Rehabilitation Centre Inc
Rocco Guerriero, president
Ontario Association of Community-Based Boards for Acquired Brain Injury Services
Robert Thompson, chair
Wes Brown, policy director
JoAnne Davis-Zulik, member agency representative
Adam Wegman, member agency representative
Alfred Kwinter
Advocates' Society
Graham Dutton, member
Philippa Samworth, member
College of Chiropractors of Ontario
Leo Rosenberg, president
Carole Conti, member
Roberta Koch, treasurer
Linda Bohnen, legal counsel
Acquired Brain Injury Network
Rika Vander Laan, regional coordinator
Esmail Shahidi; Brian Leila
Ron Gillis
Cicil Jaipaul
Accident Recovery Physiotherapy
Michael Benyacar, owner
Sharee Mandel-Benyacar
Pat McPolin
Norman Parson
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:
Boushy, Dave (Sarnia PC) for Mr Spina
Churley, Marilyn (Riverdale ND) for Mr Silipo
Crozier, Bruce (Essex South / -Sud L) for Mr Phillips
Gilchrist, Steve (Scarborough East / -Est PC) for Mr Hudak
Hastings, John (Etobicoke-Rexdale PC) for Mr Ford
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 0922 in room 151.
AUTO INSURANCE
ONTARIO MEDICAL ASSOCIATION
The Chair (Mr Ted Chudleigh): Welcome to our last day of hearings at Queen's Park. This morning we have the Ontario Medical Association joining us. Welcome to the committee, gentlemen. We have 20 minutes together, if you would like to present your brief, and we could use any remaining time for questions.
Mr John Krauser: Thank you. I'm John Krauser. I'm on the staff of the Ontario Medical Association. With me is Dr Ted Boadway, who is director of the health policy department, and Mr Jim Tsitanidis, who is with our department of economics.
Mrs Margaret Marland (Mississauga South): I'm sorry. I didn't get the last name.
Mr Krauser: Tsitanidis. Starts with a "T."
The brief has been circulated to you, I hope. We passed it in on Tuesday. It's made up of three sections. The first section has specific recommendations, and I'll go through that. The other two sections are more general, and some questions in the third section which -- I'll just simply highlight the latter two.
The first recommendation under "Description of medical benefit" in the regulations, we suggest that you add the word "psychiatric" to the words "medical" and "surgical." I appreciate that perhaps psychiatric was part of medical and historically has been, but there is concern out there that if psychiatry isn't specifically recognized, there may be some question about psychiatric benefits.
The second recommendation is on the same page, page 19 of the accident benefit regulations. There is the provision that, "The insurer is not liable to pay a medical benefit for goods and services that are experimental in nature." We'd like to recommend that you define the term "experimental," and there are two reasons for that.
Number one, in the field of cancer, a tremendous amount of the improvement in cancer care has come as a result of clinical trials and enrolling patients in clinical trials, and we would suggest that perhaps the same paradigm works for rehabilitation. In other words, when you've exhausted your first-line and second-line effort at helping somebody return to normal function, enrolment in a clinical trial at that point can be access to the best care. So we would suggest that the insurance coverage for everybody cover care provided in the context of formal approved clinical trials.
The second reason for defining the term "experimental" really arises out of the extended health care field and my experience with it. There you often find the insurers using the term "experimental" to discount treatment for a patient that looks somewhat unorthodox. What often is going on is that the physician is providing the patient a highly individualized course of treatment, it's a hard case, and while on the surface it may look unorthodox, in fact it's highly individualized medical care. We wouldn't want to see the auto insurers using the term "experimental" to discount that kind of situation, and we think you can get at it if you just try to define the term "experimental." We think some of the language in the submission will give you some of the concepts that you can use to exempt those two areas.
The third recommendation has to do with the duty that's imposed on the insured to seek return to work and to participate in rehabilitation. From our work on return to work, we no longer think you can just simply address the patient in this area. You really have to address the employment setting in terms of time to return to work and the capacity of the employment setting to accommodate. We would recommend that you find a way to recognize that employers have a duty to cooperate, as well, by providing timely and safe return-to-work programs for the disabled employees, and we would suggest to you that if you would like to see what business can do for business in helping the work site improve their skills, you might want to look at the Washington Business Group On Health, and I can give you information about what they do to help educate employers on how to comply with the Americans with Disabilities Act.
The next recommendation, 1.4, relates to the portion of the bill where you're proposing to assess some of the health care costs to insurers, and we assume you're talking about physician, ambulance and hospital costs and acute care portion. We would like to just suggest that an alternative might be to have physicians bill the insurers directly. I think it's premature to recommend you move in that direction, because there's a fair bit of exploration that one would have to do to know whether that would be a convenient and feasible way to do business, but nevertheless, we'd like to at least put it in front of you for your consideration.
Our recommendation, because we don't quite know where you're going on this, is that before you proclaim the legislation there be a meeting between the OMA, the OIC, the Ministry of Health and auto insurers on how physicians will bill for their services under the new legislation. So we're asking you to give us an opportunity to have that kind of a meeting before the legislation is proclaimed.
In 1.5, we're making reference to the treatment plan provisions. You've defined a treatment plan, and as far as I can tell, you're requiring the written treatment plan in the case of all applications for benefits. We disagree with that. We looked into this area over the last year or so and the rubric that comes up is individualized written rehabilitation plans, and our feeling was that these plans do make a contribution to coordination of care, they are valuable, but they have limited use in complex cases, and we think those types of situations should be defined by the health professionals in the field for the insurer, but requiring written plans in all cases is too much. We would suggest -- I think the word "shall" is used in reference to these plans -- you might want to consider "may" and then allow the field to develop some criteria on when they would add value.
The second point about treatment plans is the cost requirement to cost out things. We honestly don't think, as written, with the cost requirement that you've given physicians a doable task. There are two reasons for that. Number one, the course of treatment and the response to treatment is open-ended and it's not always easy to predict. Secondly, where a physician is dealing with multiple impairments with different systems involving different practitioners, we don't think it's practical to require a physician to cost all of that out in advance of the benefit. So we don't think physicians can comply with this part of the legislation, as written. They don't have the information; they don't have the data.
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The next, 1.7 -- there's a provision to allow chiropractors and physios to do some physical therapy in advance of the treatment plan being approved. That's in subsection 42(6) of the benefit regulation. A number of physicians, family doctors, take great pride in being able to provide manipulation to their patients, and they would certainly want us to ask you to include physicians in that section along with chiropractors and physios. That is our recommendation.
In 1.8 of our submission, the 21-day requirement to provide information to an insured person for, I believe, the DAC but also for insurers, has the potential to put physicians in a very difficult position. You may know that physicians have an obligation to cooperate by providing information under their regulatory body. The potential of patients coming in three, four or five days before the 21 days are up in a panic asking physicians to fill out the forms and send them along can cause an awful lot of difficulty and bad feeling. What we recommend is that the legislation identify a fixed start point for the 21 days, such that the physician will have the benefit of all 21 days in which to prepare the information requested. I don't know how to do that, but that's our recommendation.
The next section is general recommendations, and there are only two. We think they're all worthy of your consideration. We don't know how to translate them into legislative changes but I'd bring two to your attention. In 2.4, we suggest you look at the Ontario Trauma Registry. It's funded by the Ministry of Health. It collects admission data on all accidental injuries or a good number of accidental injuries in the province, including motor vehicle accidents, but they also provide a mechanism to do an assessment of the severity of disability. What I think you might consider doing is either building into the premium structure -- probably there are other alternatives -- some money to enhance the capacity of the Ontario Trauma Registry to do more of that kind of development of data, particularly data around the nature of injuries and also the level of disability, that you find some money to enhance their capacity to provide this kind of data in Ontario. They do a six-month follow-up so that you can see what in fact rehabilitation is accomplished. They could do a year follow-up. We think it has significant potential, and they'd be interested in that kind of proposition. So it would provide everybody with data on the nature of vehicle accident, impairment and trauma in the province.
The second recommendation that I would mention to you is 2.7. I've not been able to figure out -- and maybe it will be clearer under the future legislation -- some principle by which I could advise physicians on when to stop billing OHIP and when to start billing insurers. Perhaps I just simply am not part of the day-to-day system. Maybe the system works that out quite easily, and I just don't know about it. But I'd ask you to take a look at that. The language for medically necessary and insured is a medically necessary service. The language in the legislation is reasonable and necessary. I think it would be helpful if you could clarify the transition point, especially if you don't do anything else about physician direct billing to insurers.
The questions that we would ask you to try and provide some information on are on the last page, and I won't go over those. They're self explanatory, I hope.
That would complete our submission. If we can answer some questions, we'd be pleased to do so.
Mr Bruce Crozier (Essex South): Good morning, gentlemen. My question doesn't relate to what's in your brief, although we're interested in reading that in detail. It goes to a concern that's come up during these hearings, and that is with conflict of interest: doctors having a financial interest in rehab centres and referring to those rehab centres which they may have a financial interest in. I would like your opinion as to how the OMA feels about that, and what they might do then to help us define tighter guidelines under conflict of interest.
Dr Ted Boadway: This is always a problem when anyone can make a referral to their own work, so it is a problem that you have to think about with chiropractors, physiotherapists and physicians.
Mr Crozier: Certainly. I'm asking your opinion, but it goes to the whole field.
Dr Boadway: Each profession has their own rehab centres that they run and operate. It is a problem. It's also a larger problem when you get to -- if I refer to my own services to do surgical work, in a way it's self-referral, and so it's always a problem we have to be cognizant of in professional endeavour.
I think there are two things. First of all, I think under this circumstance the insurers are going to have an excellent and appropriate management role in case-managing patients' work. So it's not going to be an absolutely free hand for anyone who would like to just do what they want. Secondly, I think that as a profession we have to continue to look very hard at our own work and look at the professional guidelines for areas where we refer to ourselves. As you know, that work is undergoing extensive work at the present time; it's developing day by day. But I don't have a magic answer for you.
Mr Krauser: There are guidelines from the college on the subject.
Mr Crozier: There are? Okay.
A further problem, it seems, and still in the area of conflict of interest, is that a number of medical practitioners do insurance exams; in other words, they're paid by the insurance company to do various kinds of insurance examinations. The same medical practitioners may also be in the area of DACs, the designated assessment centres, passing judgement on claimants who are being assessed, and that must be a difficult job too, to kind of separate the two. In one case, you're passing judgement on claims that an insurance company may be disputing, and on the other hand doing a number of medical examinations for the insurance company. Is that an area of conflict as well that you have dealt with?
Dr Boadway: Whenever physicians work under the employ of someone, whether it's for the lawyer for one side or the lawyer for the other side, or for a company for one side or a company for the other, the relationship between the physician and the patient and the paying agency has changed. It's not the one you usually face when a person comes into the office for a regular visit.
The only advantage you have there is that, generally speaking, everybody knows who's paying who. It's clear to the patient that the doctor's being paid by someone else; it's clear to their lawyer that the doctor's being paid by someone else. We know that these result in some very sticky situations, with lawyers getting doctors who they think will line up with their positions, and companies doing the same. It's not nice to contemplate that kind of thing, but the fact is, it happens. The only real benefit is that everybody knows who's paying who, and that helps sort it out.
Ms Frances Lankin (Beaches-Woodbine): Ted, with respect to the point you just made about ongoing work being done in the area of conflict and self-referrals etc, are you speaking within the college or within the OMA? I'm not aware of it; tell us a bit about that.
Mr Krauser: There are conflict-of-interest guidelines in the college material; been there for a long time. We've spent a fair amount of work; we have to extrapolate from it, but we've spent a fair amount of time thinking about the relationship between physicians and pharmaceutical companies. The principle we came to there was full disclosure. If you are comfortable telling the patient who is paying you and what interests you have, that's a sign that maybe something is askew; so full disclosure rather than forbidding -- full disclosure was our principle.
Ms Lankin: There's been a fair bit of discussion about this during the first three days of the hearings. It has been raised, there have been articles provided to the committee which have raised concerns, and it's around multiple practitioners, not just physicians but in fact it seems to be more prevalent that it would be a physician-owned clinic where the study has been done. That doesn't mean that's where it happens most often, but that's just where people looked at it. It would be helpful, if there is work that is going on in the college or in your association or there is other material, for you to provide that to the committee, because the view of it that is emerging is that it's a very large area and one in which the government needs to start to take some action. So it would be helpful to have your input.
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Dr Boadway: I'm aware of the tremendous amount of flak that's being raised in this subject. It's just sort of risen up just recently. Really, I think what we're dealing with here is a conflict of several commercial interests, when you look at it, and when commercial interests start looking at it, they're quite able to call the other pot soiled without even disclosing they have their own pot.
Ms Lankin: Yes, I realize that.
Dr Boadway: It's quite seamy, actually, so I don't know where the truth is in some of these charges. I'm worried that there may be a germ of truth in some of it, but certainly the flak that's around right now, you have to be very careful who you listen to.
Ms Lankin: I understand that and that's why I'm suggesting that if there is any work that's been done or any of this that has been examined -- a few years ago it was an issue around physicians owning laboratories.
Dr Boadway: That's right.
Mrs Marland: I have two questions and the first one I want to preface by telling you that I am married to a general practitioner in dentistry, so it's not that I don't understand specialties and the professions. But I am interested in what you're suggesting in 1.7 about including physicians, that they be added along with physiotherapists and chiropractors in subsection 42(6). We have a lot of very close friends who are physicians, and I would like to ask you if you think that physicians have the same training that chiropractors have.
I know we have this age-long debate about who does what, but I would ask you the question quite respectfully, because chiropractors go to school for six years to learn one thing and general practitioners in medicine go to school for the same number of years and have to learn a whole lot of things. So I guess I have some reservations in that suggestion that you have under 1.7 in terms of the specialized treatment that is being rendered, because I know GPs who will not do certain things because they don't feel they've had the training for it, whether it's in medicine or dentistry.
Dr Boadway: I'll start and then I think John'll pick it up. First of all, chiropractors, physiotherapists and physicians do manipulation and not one of the three professions is trained the same. You don't have to come through the same training route to be able to do something well. You can learn it. Just like dentists and physicians have significant overlap in what they do and both do it well, they come by a very different route.
Secondly, at the present time, family doctors and orthopaedic surgeons do an extensive amount of manipulation. Orthopaedic surgeons are trained for about 13 years and they do manipulation on a daily basis.
Mrs Marland: I wasn't talking about orthopaedic surgeons.
Dr Boadway: They're included in physicians. And then we have a very well-trained cadre of family doctors who have taken extensive training beyond their regular training, who actually do a lot of manipulation on a regular basis and are referred to by other family doctors to do manipulation.
Mrs Marland: Right. Excuse me interrupting you, but you're not putting any addendum to what kind of experience those physicians have to have. The physicians that you're describing now obviously do have the expertise and the specialized additional training; I'm talking about just putting in physicians, blanket.
Dr Boadway: The model you would choose is the one already chosen by the Legislature, which is the Regulated Health Professions Act. In the Regulated Health Professions Act, this was very extensively canvassed over a period of a couple of years.
Ms Lankin: Very extensively.
Dr Boadway: And not just during the time of your government, I might add.
Ms Lankin: Eight ministers of Health.
Dr Boadway: Eight ministers of Health. This came up with practically every Minister of Health over many governments. As a result of that, the RHPA recognizes that physicians may do manipulation, and that's without limit. The reason it was recognized is because physicians in fact have very stringent limits; that is, under that act I could do thoracic surgery. I'm clearly not competent to do so, and the reason I'm not is because there is a very excellent control system that prevents me from doing that through the College of Physicians and Surgeons. So it was decided not to duplicate or re-duplicate a control mechanism already functioning well in place.
So in the RHPA, manipulation is granted already to all physicians, but it's clear from that that only a small minority of our physicians practise it. They practise it in their zone of confidence and competence, and that would be true here. So I think if you limit it here, you're doing something that's already been recognized by the Legislature as appropriate.
The Chair: We appreciate the Ontario Medical Association's input into our deliberations. Thank you very much for joining us this morning.
DISPUTE RESOLUTION SERVICES
The Chair: We now have Dispute Resolution Services joining us, Mr Hendler. Welcome to the committee.
Mr Cliff Hendler: Good morning, respected Chair and committee members. Please accept my thanks for allowing me the opportunity of addressing you this morning.
By way of brief background, my name is Cliff Hendler and I am the president of Dispute Resolution Services, an alternative dispute resolution firm which specializes in the area of insurance mediation and arbitration. My personal background is that I have been involved in the resolution of insurance disputes for the past 21 years, the first 15 years of which were involved in the insurance side as a claims adjuster, manager and auditor, and for the past six years I've been involved primarily as the mediator of personal injury lawsuits. I've been appointed as mediator in over 1,000 cases and I've seen successful resolution of more than 90% of those cases.
To my left is my associate Bruce Robinson, a lawyer and arbitrator with 22 years' experience in the handling of insurance litigation, with an emphasis in the field of personal injury matters. Prior to joining our firm, Mr Robinson was an arbitrator at the Ontario Insurance Commission.
My high commendations to you and to the others involved in the proposed changes towards an ever-increasing usage of ADR in the resolution of accident benefit as well as tort cases. My brief comments to you this morning relate to these proposed ADR changes and in particular the use of private sector mediators, arbitrators, as well as the new role of the neutral evaluator.
While the proposed legislation contains significant references to the use of private arbitrators, it is silent on the use of private sector mediators. During the course of the past couple of years, and in vastly increasing numbers over these past few months, there has been an increasing amount of disputed claims which might ordinarily have been referred to the Ontario Insurance Commission but instead have been referred to our office in search of private sector mediators. These cases are usually the ones where the issues are complex and multiple, with the exposure being both for accident benefits as well as on the tort side.
One of the main tenets of ADR is that the parties to the dispute have the ability to choose their neutral third party in whom they have faith to listen and assist in the resolution of their matters. Whether it a binding or a non-binding process, the ability to choose the neutral goes to the very heart of what alternative dispute resolution is all about.
During the past five years at the Ontario Insurance Commission and for the past couple of years at the court-annexed ADR program, the complaints made by those who have been dissatisfied with the process have by and large been related to the choice of the neutral who has been thrust upon them. This complaint may not necessarily be due to the competency of the neutral but rather to his or her ability to understand the substantive matters underneath the dispute, or perhaps the ability of that person to get along and to help the parties in their resolution of the claim.
I have been known to say on many occasions in the past few years that Ontario has become one of the most sophisticated ADR markets in North America. By this I mean that when counsel or insurers propose matters for private sector mediation, they don't simply ask for any mediator, they want a specific mediator; someone who they believe will be able to provide them with the type of process and knowledge that they believe is important to the resolution of the dispute.
The proposed addition of the neutral evaluation stage to the ADR process carries with it the same logic and philosophy. Section 280.1 states that in the event of a failed mediation, the mediator or the parties jointly may "refer the issues in dispute to a person appointed by the director for an evaluation...."
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When we are again looking at a non-binding process where parties are being encouraged to come to their own negotiated settlement, it is absolutely essential that the parties have faith and trust in the neutrals' knowledge and ability to guide them wisely. This ability to choose your neutrals continues with the government's philosophy of putting the dispute process back in the hands of the parties themselves.
In this regard I propose that section 280.1 be amended to read as follows:
"Neutral evaluator
"280.1(1) If mediation fails, the parties jointly or in conjunction with the mediator, for the purposes of assisting in the resolution of the issues in dispute, may refer the issues in dispute to a neutral evaluator who shall be a person chosen by the parties to assist in determining the probable outcome of a proceeding in court or an arbitration under section 282.
"(2) In the event that the parties cannot jointly agree on the appointed neutral evaluator, each party shall name their own choice who will in turn be called upon to come to an agreed neutral evaluator as between themselves. In the event there still is no agreement, the mediator who initially was involved in the case shall be called upon to provide the final choice of neutral evaluator."
In respect of the inclusion of private mediations under the proposed legislation, only minimal changes need be required. As for example, subsection 280(8) would be modified to read as follows:
"If mediation fails, either privately or under the act...."
This language would be followed in other sections as appropriate.
In closing, may I again commend the government for the choice in moving towards a higher factor of ADR usage. I believe that with the proposed change, as we set out above, the entire dispute resolution process will be reflective of the government's goals, and most importantly, of the needs of the disputants involved in the dispute.
Ms Lankin: I only have a couple of very quick questions. You'll forgive me, I'm not very knowledgeable about this area of the insurance world. My most obvious parallel is my experience in the world of labour arbitrations, both interest arbitrations and rights arbitrations, so I'm quite familiar with the process of selecting nominees to a panel and nominees working to select arbitrators.
In this case, is there a list of approved neutral evaluators? Is that somehow set out through the commission so that you know out there who's got the expertise and whom to draw from, or is it just who's been around and who's got a reputation?
Mr Hendler: In the Ontario Insurance Commission, you get whoever is chosen; whoever is next on the list would be given that case, either in mediation or in arbitration. In the private sector, people will go to a firm such as ours or others to choose, either for a specific mediator or perhaps for a company or for a retired judge, but it's very much driven by people looking for a specific person and that's only available, to my understanding, in the private sector.
Ms Lankin: So there isn't sort of a set of courses or a qualification or anything that acknowledges you as a person in this field.
Mr Hendler: Right. Throughout North America there is no governing body that regulates mediators or arbitrators. It's very much a market-driven force. The proposed recommendation is that our mediators take 40 hours' worth of training. Mediation, being a non-binding process, is only successful if the mediator, him or herself, is successful and has the ability to get the parties together. The market determines who's good and who's not, who's hired and who's not.
Ms Lankin: Forgive me, but I sort of see the possibility for all sorts of problems, but if they don't exist I don't need to raise them at this point in time.
Mr Hendler: Thanks.
Ms Lankin: Let me just ask you then with respect to your proposal and the process for the parties if they can't agree to a neutral evaluator, appointing individuals who would then try to agree. Failing that, the mediator would choose the person. Are you recommending any time limits be set in? Again, my familiarity with pieces of legislation that have similar processes has time frames set out for setting out names and responding.
Mr Bruce Robinson: If I might respond to that, the time frames are important and we didn't specifically put that in because in the private process things happen very quickly, and usually if somebody says today, "I'm not going to make a decision," the person on the other side is going to jump up and down and we're going to say, "You have to." But at that point, on a private basis, it has to come back to the government. I would suggest that the time frames they have now are too long, so it's going to have to come from the government. I don't know what it's going to be though. It no longer becomes a private matter. It's going to be back in the public sector and you've got time frames there. If you choose mediation, arbitration, through the OIC, there is a process in place.
Ms Lankin: Right, I understand.
Mr Robinson: Privately, it's different, so we really can't comment on that.
Ms Lankin: Okay, thank you very much.
Mr Rob Sampson (Mississauga West): Thank you for your presentation this morning. This is clearly an area where we spent a considerable amount of time because we felt that if we tried to speed up the process, it would help everybody involved in the claim. Frankly, that's why we didn't have the option for the private mediation process. We had some concern there might be hopping back and forth between the private and the OIC sector, and that would cause some confusion. Can you comment on that?
Mr Hendler: My comment would be that the private sector mediation has been so successful in the past five years that we really don't have that kind of concern. More than 90% of cases we're seeing right now are resolving. The only way to really address your concern, Mr Sampson, would be to have people choose the path they're going to take. They may choose to go the private route; they may choose to go through the OIC; they may choose to go through the litigation process. We haven't seen in the past parties hopping back and forth and I don't anticipate that there will be any increase in that area whatsoever.
Mr Sampson: The reason we liked the private route for at least one of the levels was it would provide some competition from the private sector. People would be able to justify the cost in both the forums and hopefully that would keep some of the cost levels down. Can you comment on what the relative cost is between what happens at the OIC currently and what happens in the private sector and whether you think there's a cost advantage in the private route?
Mr Robinson: I don't know what the cost would be per individual case at the OIC to run it through. Through our organization, a half-day or a full-day hearing can be done very expeditiously; a quicker time frame than running through the OIC, which of course saves everybody time -- the lawyers on both side -- and if there's a settlement, the money is into the hands of the injured accident victim far quicker. So there's a saving there which isn't really dollars and cents. The private ADR systems do not have the overhead and the great support staff that the government agency has, so I think we're running a little leaner.
Mr Sampson: I guess they might have the overhead, but they don't charge it out unless there's some service being provided is the way it works, isn't it?
Mr Robinson: The other thing we have to look at is that the marketplace is not going to give us business if it's not cost-effective to them. Nobody's going to come to us if we can't compete. That's the bottom line.
The other thing that's important about the ADR process is that we can handle multiple claimants on multiple issues. We might have three people who have been injured in an accident. They can come to us in one day and do their tort, get that settled, the generals and specials, plus resolve their accident benefits. Running through the process which is presently in place, they're going to be in the court system for their tort, and may be in the OIC. You've got a lawyer going to one place, you have a lawyer going to another place, and you're going to get two different decisions spaced out over a different period of time. With this, we can handle it all. The mandate of the OIC is restricted to a very small area, but with ADR we can handle all the issues. I think that's very important. That's something we need to bear in mind.
Mr Sampson: Sort of a one-stop-shopping type of approach.
Mr Robinson: It's one stop, it's effective and it works.
Mr Sampson: Can you comment on what you believe to be the value of the neutral evaluation? We've had some comment, albeit from the legal community, that the neutral evaluation process is just another process but not going to be terribly effective. What's your view?
Mr Robinson: I have come from the legal community, having been in litigation many years, and I must admit I was somewhat sceptical when this first came to the forefront back in the mid-1980s. As time went on, towards the end of the 1980s and into the 1990s, I got into this with both feet, because I see it as a fantastic way to get things resolved, not just car accident cases but we've seen it in the labour area.
It's amazing how you bring a neutral person in and the whole complexity that was there shifts down. It's easier to deal with. People see where they're going. You need somebody to come in who's neutral. You don't necessarily need a lawyer, you don't necessarily need a doctor; you need a neutral person who's unbiased, who can help streamline the people in looking at what they want to achieve, what are the interests, as opposed to their positions. You have two people butting their heads with positions, but what do they want at the end of the day? What are they going to be happy with? That's where the neutral comes in; that's where the arbitrator or mediator helps. I think that's very important.
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Mr Hendler: My concern about having the step of the neutral evaluator is that it turns out to be another step along the process which might tend to water down the other processes. When pre-trials first began they were very effective, because people used the pre-trial stage to get the case settled. Now it has become more perfunctory, where you're just looking for your dates and trying to get the case moving forward.
People come to mediation right now, when they're not forced to, with every intent on resolving that case. They're ready to settle it, they want to settle it, and they get their cards in order to get the job done. By adding the additional step of the neutral evaluator, it may be good for those cases that don't settle at mediation, because in the majority of cases people have an honest disagreement as to the proposed value of a case. I'm not necessarily opposed to the process of a neutral evaluator.
The other thing to consider is that the mediators who are going to be hired by the parties in the private sector will more than likely have substantive background to become the neutral evaluator, if the parties so choose. We don't have to have a different person as mediator and neutral evaluator. We do need to have somebody different from the mediator to the arbitrator, because the mediator will hear issues that may not be under proper evidentiary rules. So I'm not in favour of having a mediator and arbitrator as the same person.
Mr Crozier: I've always had a latent desire to be a mediator, because it seems to be so much nicer than this partisan atmosphere we find ourselves in and it can be more of a consensus-builder. But in any event, that leads me to the question, do you have a standard which you and others who are private mediators can maintain? In other words, how do we know, when we go to the private sector, perhaps any more than on the government side, that we're getting quality mediators?
Mr Hendler: There is a code of ethics which is put out by various organizations. There are a number of international organizations for mediators and arbitrators; one is called SPIDR, Society of Professionals in Dispute Resolution. There is a code of ethics as to conflicts of interest and abilities. The majority of mediators who are out there adhere to those, not by legislation but by their own personal code of ethics. This goes to the question of the honourable Frances Lankin: There is no government body that governs it. The marketplace, as I said before, in Ontario in particular is very sophisticated. People want a certain mediator because they've dealt with that person, they know their abilities, both in the underlying substantive matter and their procedural abilities. So it's market-driven as opposed to regulated.
Mr Crozier: I certainly think it's something we should consider, and I was interested in your observations.
The Chair: Thank you very much to Dispute Resolution Services for joining us today and helping us with our deliberations.
ARBITRATION AND MEDIATION INSTITUTE OF ONTARIO
The Chair: We now welcome the insurance section of Arbitration and Mediation Institute of Ontario. Mr Bowles, welcome to the committee.
Mr Patrick Bowles: You have before you just a two-page document outlining some suggestions we might have the committee consider, but also we are sort of an institute-type organization. Attached to the documents you have our mission statement, criteria for membership, our code of ethics, mediator criteria, just to give you some background about the institute.
We are something of an institutional-type organization as opposed to a private mediation service. The previous group before you was a private service. I'd like to draw your attention to the first recommendation there, "In the definition of `private' arbitration, mediation and assessments include institutional as well as private ad hoc arbitrations, mediations etc." The reason is that we have a standard set of rules governing arbitrations and governing mediations which are made available to the public or to anybody who's in this process, so we have a standardized way of processing the information.
We also have, as I said, a code of conduct; we have a board of directors, which is elected annually; and we have a membership of about 360 people. This membership really composes the backbone of our institution and is drawn from a very wide area of background -- architects, lawyers, doctors and engineers. Part of our work is to try and match the dispute with the particular expertise. That's one of the advantages of the institute, that it has a very broad background.
Recommendation 2: Our suggestion is that we should exclude the OIC from arbitrations and mediations and allow the so-called private or institutional organization to carry it. Primarily, as was mentioned before, it does lead to confusion or could lead to confusion. All arbitrations and mediations should go to private or institutional hearings.
Recommendation 3: We would suggest that the rules for arbitration and mediations and other processes be standardized so that everybody basically is doing the same throughout the province. However, by mutual consent, the parties can modify the hearing rules and the arbitrator's mandate. In the tort hearings, the arbitrator should have, we suggest, the same authority as the courts. I notice in the proposals that various powers have been given to the courts. We suggest that the arbitrator should also have some of these powers -- for example, to impose structured settlements -- as you're proposing with the courts.
Recommendation 4: As I mentioned, all mediators' and arbitrators' mandate should be subject to standardized rules and, as I said, mutual consent of the parties required for modification.
Recommendation 5: Accident benefits: Disputes restricted to private and institutional mediation and arbitration procedures and assessments should be considered as part of the above process; not excluded from it, but as part of the choice that sometimes the parties may wish to exercise -- have an assessment, independent evaluation, and so on.
Recommendation 6: Designated assessment centres: I don't know what the plans are for this but I can see there may be some problems. My suggestion is that service providers be allowed to provide these designated assessment centres throughout the province.
Recommendation 7: Tort disputes: Again, the parties have a choice of either going through arbitration and mediation or going through the court system. One exception I might have is that in the litigation system disputes relating to quantum should be settled by mandatory mediation and arbitration. Very often, these require expertise which can solve these issues much more effectively than, say, pushing it through the court system. Of course, liability issues should be settled through the court system or by binding arbitration, again at the option of the parties.
On the last point, disputes relating to the interpretation of insurance policy wordings and the Insurance Act should be fast-tracked, either to the courts or specially appointed experts for binding opinions. Again, there's a great delay by using the court system to getting disputes resolved or issues resolved, particularly legal issues, and they can be perhaps fast-tracked through the system.
I thank the committee for listening to our presentation.
Mr Wayne Wettlaufer (Kitchener): Thank you for your presentation, Mr Bowles. One of the things I've noticed in both presentations this morning, unless I'm putting words in your mouths, is that there is a concern about the ability of the Ontario Insurance Commission to properly mediate and arbitrate disputes. Is that correct?
Mr Bowles: Yes.
Mr Wettlaufer: Could you give us a little more detail on that, please?
Mr Bowles: I think, as mentioned before, their scope is somewhat restricted in their ability to resolve disputes, whereas if the ADR process is looked at in its totality, it gives more choices to the claimants to find a better solution. Secondly, the choice of the arbitrator/mediator is very important. It's very important to have the background of the dispute; for example, if it's an accounting issue, that the arbitrator/mediator is fully versed in accounting issues. Therefore, the selection of the arbitrator is very, very important. Thirdly, I think the rules we use can be more beneficial, both to the insurance company and to the claimants, instead of using the OIC rules, which I think are somewhat limited in structure. So there are primarily three reasons.
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Mr Wettlaufer: Prior to the setup of the alternative dispute resolution system, under the old insurance policy the insured and the insurer were able to select their own specialist who then in turn could appoint an arbitrator. Could you fill us in as to whether or not there were problems at that time that led to the creation of the alternative dispute resolution system?
Mr Bowles: I'm not familiar with some of the background there. This is prior to the --
Mr Wettlaufer: Prior to ADR.
Mr Bowles: In what sense?
Mr Wettlaufer: Under the statutory conditions of the insurance policy of that time, both were allowed to select their own arbitrator who could then appoint a neutral arbitrator.
Mr Bowles: Oh, you're referring to appraisals and evaluations and property losses.
Mr Wettlaufer: It wasn't just property losses; it was also bodily injury, BI.
Mr Bowles: I'm not aware of it, but I just think it wasn't well established at the time to be used successfully. I think the market has changed, the movement has changed, and I think there's more willingness, by the legal community particularly, to look at these issues. There was a lot of difficulty in getting them through, but I'm not aware of any particular problems with it; it simply just wasn't used effectively.
Ms Annamarie Castrilli (Downsview): Let me congratulate you, Mr Bowles, for a very concise and clear set of recommendations. I gather that the underlying premise of your paper or your position is that there ought to be consistency and there ought to be clarity, which I commend you for. Let me just ask you a couple of questions to elaborate on some of the recommendations you made. Your first recommendation talks about private arbitration including private arbitration, which almost seems self-evident, but perhaps you could talk a little about how your organization, which I assume represents private arbitrators, accredits those arbitrators.
Mr Bowles: How we accredit them? First of all, there's a membership process. People have to apply, fill out an application and send in a résumé. Then that is reviewed by a committee as to its acceptability. Usually then, if the background is sufficient, they have some sort of background expertise that can be used in this process, they are accepted as an associate member.
The next stage is that they have to become a full member, and that is they have to take a designated course, either in arbitration or mediation. Usually they are run through the university or some private organization which we recognize and which we have approved. So these courses are actually accepted by the board as being of sufficient quality to satisfy our procedures.
The next level actually is if somebody has had a number of years of experience, then they can apply for chartered mediator or arbitrator status. Again, they send in their experience, what has happened, occurred. I think they are interviewed. Then this designation is refused or put aside, depending on the application.
But there is a graduating process. There's a continuing interest. They must stay a member of the institute. We have various programs put on during the year which we try to encourage people to attend. So there is a definite structure and process in place.
The other point too is that if they do have hearings under the institute's mandate, they are basically obliged to follow the institute's rules -- in other words, for uniformity and conformance -- and there is of course a code of conduct which can be exercised in the event there is a complaint.
In the insurance section, we also have a process to review any complaints with respect of fees that have been charged by the arbitrator or mediator, or any disputes arising out of the hearing.
Ms Castrilli: Your third and fourth recommendations talk about standardized rules. Has your organization done any work in that area? Do you have a set that you abide by, for instance, that would be of use to us?
Mr Bowles: Yes, we do. I will be submitting some more information and we can submit these rules to you for your consideration. They have been worked out by committee, people who have a lot of experience in the areas, both in arbitration and mediation, so we do have a standardized set of rules, yes.
Ms Castrilli: I have just one final comment, with respect to recommendation 7. I'm intrigued by the notion of fast-tracking. That's a fairly common technique in other areas of the law where all you're dealing with is an interpretation of a particular statute. It requires no evidence; it's all done by affidavit. It would seem to me that would be a very easy solution to some of these problems and save some time. I guess that's what's behind your recommendation.
Mr Bowles: Yes. Alternatively, if there is, say, a panel of experts who can be called in to give binding decisions on these issues as opposed to going to the court system and others waiting for your time, that's an alternative situation that the committee might want to consider, that there be designated individuals who can apply for this position and have the expertise so they can be called upon to give binding decisions to the parties in a relatively short time frame.
Ms Lankin: I really only have one question. It's with respect to the uniformity of rules. When I was asking questions earlier of the previous presenter, part of it was difficult for me to understand: how this operates out in the private sector where it's not regulated at all. You are suggesting that even that process should be subject to the same sorts of rules that are under the Arbitration Act.
I spent a bit of time as a member of the Workers' Compensation Appeals Tribunal, and in the early days, working through the development of the rules of practice, which were very similar to what you would find in any administrative law tribunal, I would worry about an individual seeking an alternative dispute resolution and not knowing, for example, that they were dealing with someone who understood the rules around disclosure and due process. So I'm just wondering, is this a problem now that there isn't uniformity of rules, or are you just saying that needs to be made clear for the future as this emerges as a larger field in insurance?
Mr Bowles: I think there's little doubt that the way things are going now, it's going to become a very significant field for commercial disputes, for insurance disputes, and I think it is necessary that there are standard rules that people can adopt. As time goes by, people will become very familiar with them, particularly the legal community, so they don't have to be reinvented every time there's a dispute; also too with the flexibility that they can modify or amend them by agreement on both sides to suit certain circumstances. For example, they may want to change the time frames as to when the arbitrator is to render his report. I think it's safer. I think it makes the system private in a sense, yes; but open, not closed. So people will understand, as time goes by, the ground rules. I think over the course of any business lifetime, many business people will be involved in disputes. At least they know they're there and they know how to work with them over a period of time.
The Chair: We thank the Arbitration and Mediation Institute of Ontario for its presentation to us this morning.
JAMES PESANDO
The Chair: We now move to Professor Carr, University of Toronto. I understand this presentation will be made by Mr Pesando.
Dr James Pesando: Yes. A resident of Milton, Ontario, I might add.
My colleague Professor Jack Carr, with whom many of your committee members will be familiar, prepared a brief with regard to one key feature of the draft legislation. Unfortunately, Professor Carr is travelling this week. Having consulted with Professor Carr, I agreed to present the essence of his remarks to the committee. I should add that I too am a professor of economics at the University of Toronto.
The basic message in this brief is straightforward. The draft legislation proposes that the innocent victim of a motor vehicle accident be permitted to sue for 85% of net income. From an economic perspective which encompasses both equity considerations and efficiency considerations, the appropriate response should be to permit the innocent victim of a motor vehicle accident to sue for full economic recovery; full economic recovery consists of 100% of earnings. Second, in order to simplify a set of issues with regard to taxes, it is appropriate to permit the individual to sue for 100% of pre-tax income.
Very briefly, the economic arguments are as follows: From the perspective of the efficient operation of the insurance system, what we as economists want is to ensure that those who are the high-risk drivers, those who represent threats both to themselves and to the third parties in effect bear the full cost of their driving records. In order to do so, it is important that the high-risk premiums that are directed to high-risk drivers fully reflect the economic cost that those negligent drivers impose on society as a whole. So from a point of view of the efficiency of the insurance system, economic analysis tells us it's imperative that those who are at fault bear the full cost, from a social perspective, of their actions.
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From an equity consideration, economic analysis strongly supports the notion that an individual should be allowed to recover his or her full economic loss. For example, in the draft legislation it is proposed that an injured party be able to recover 100% of health care costs but only 85% of a net income loss. There's no reason in economics why we should treat differently an out-of-pocket expense for health care, as opposed to an out-of-pocket loss for future income. The 100% target for economic loss receives considerable emphasis in this brief.
The second feature of the proposed draft legislation is to suggest that the 85% be applied to the net income of the individual; that is to say, the income less taxes, less unemployment insurance premiums, less Canada pension plan premiums, for instance. Clearly, in order to fully compensate an injured party, one can look at the net income of that individual as a basis for awarding his or her loss of future excess income, but only if one then appropriately recompensates the individual for the taxes that would be due on the net income that would be awarded to that individual.
There are two approaches to appropriate compensation for taxes. The first would be to essentially gross up the award once it's calculated on the basis of net income. The gross-up calculation is a very complicated calculation for both actuaries and economists, and I would simply emphasize that if the legislation were to proceed in the direction of awarding net income -- that is to say, after-tax income to an innocent victim -- then we would need to gross up the award, which is a complicated calculation. If we did not gross up the calculation, we would in fact be making that person worse off as a result of the accident.
The alternative that is suggested, but not with great clarity, in the draft legislation is that perhaps if we award net income we can mandate a structured settlement. The advantage of the structured settlement would be that the structured settlement could be awarded net of tax to the individual. The problem with the mandated structure in essence is that it simply does not suit the circumstances of every individual. It's easy to imagine cases, for instance, where an injured party was hoping to acquire a home and to use his or her stream of earnings to secure a mortgage against that home. The awarding of a structure, although it might make progress on the tax issue, is not going to restore that person to his situation prior to the accident.
I have not yet seen a persuasive reason for the 85%. As I reflected prior to coming today, I thought perhaps that's an attempt to recognize that someone who has lost their earning capacity will not need to incur certain expenses associated with going to work. But it quickly became clear to me that this cannot be the logic, because many of the cases which the courts, for example, will have to address are situations where an individual perhaps has lost the use of his or her legs because of an automobile accident and now must take a sedentary and presumably less well-paying position. Obviously in this case we're comparing an individual who works prior to the accident perhaps at an occupation which requires some physical dexterity; after the accident the person still works but is in a sedentary job. Clearly it would be inappropriate to premise an 85% rule on the notion that this person has been relieved of the costs that most of us incur when we go to work.
The actual brief itself lays out a number of observations, carefully written by Professor Carr. I will be pleased to speak in response to any questions you might have on those contents.
Mr Crozier: Good morning, professor. I want to get your opinion. I should preface it by saying that I happen to be one of those who believe that the innocent accident victim should receive 100% compensation. Because you're an innocent victim, that should not mean you should have any less of an economic settlement than if it hadn't happened.
You've covered one suggestion where you don't have the expenses you had when you were working, perhaps, but another one that's often suggested is that there has to be some incentive for the person to go back to work. In other words, you shouldn't be able to stay at home and have the same income. Could you comment on that?
Dr Pesando: Certainly. Let's imagine the simplest case, where someone is so clearly incapable of work as a result of his or her injuries that there's no what we in economics call moral hazard problem. There's no potential work disincentive. So clearly for a significant number of cases the concern about the work incentives created by 100% replacement is simply not relevant.
Secondly, one of the obligations of the courts, as represented by the attorneys for both parties, is to ensure that the innocent victim makes the best possible effort to mitigate his or her loss. So within the current rules, if you will, in vertain cases with which I am familiar -- for example medical malpractice cases, just to remove the circumstance from motor vehicle accidents -- one of the issues that does arise is that the defence will argue that the victim has not made full attempt to mitigate his loss, and if the courts can be convinced that is the case, then of course the victim is not awarded the full amount of his income loss but some appropriate amount to offset the fact he failed to mitigate.
So from the perspective of 100%, if I get to the bottom line, if I am injured by virtue of an unfortunate event in a hospital -- I recover 100% of my loss -- the same concerns that you raise about work incentives obviously apply to that circumstance as well, and I think that the present system is very much aware and in fact seeks to address with some aggressiveness exactly that concern.
I would conclude by saying that clearly, in principle, one does not want to award an innocent victim full income loss if that is not in fact the case, but the current procedures allow evidence to be brought to bear on that issue, and that itself is presumably the deterrent, and the court will make a finding if someone is malingering or not.
Mr Crozier: Do think then, another viewpoint, that these reductions have been put into auto insurance plans to simply minimize or reduce the cost and therefore the premium?
Dr Pesando: Clearly for no-fault benefits, where there is no distinction between an at-fault party and an innocent party, in order to handle exactly the type of concern that you have raised, for example work disincentives, it's very customary to put in deductibles and to not allow full recovery.
The example that I would use as an analogy -- at the University of Toronto our long-term disability plan replaces 70% of our earnings. That 30% gap is designed to exactly address the issue that you've raised: to make sure that professors, who I quickly add do work, don't simply decide to retire on 100% of their salary if for whatever reason they're injured and have to decide, are they or are they not able to fulfil their duties? Well, if the answer in the mind of medical opinion is that they are not, there is a 30% loss relative to gross earnings that is in fact not paid.
So many insurance provisions do provide for, effectively, co-insurance and deductibles, but there is nothing in the way in which an economist would look at the loss of income by an innocent party, and again I would emphasize, why should a victim of a motor vehicle accident be treated differently than the victim of a surgeon's knife that went astray? In both cases yes, not a pleasant thought, but 100% of loss of income would be the appropriate response from an economic perspective.
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Ms Lankin: I should begin by telling you that I have a different position with respect to the issue of tort and its appropriateness in the auto insurance field and tend to see a disability insurance program as a fairer way for all involved. I don't believe it always is so easy to know who is the innocent accident victim and who is at fault or the degree of fault. I see and have seen in the past many cases take years in courts, with people not getting justice in the end in any way that helped them make their lives whole again as they tried to sort through all that.
But putting that aside, let me say that if we are returning to a system of tort, I agree with your arguments completely with respect to the level of recovery of economic loss. I don't see any reason to support 85% of net; it doesn't make sense to me either in that world.
I'd like to ask you, though, about the economic argument that you advance. You said that as an economist you're interested in seeing that bad-risk drivers pay premiums that bear a relationship to the full cost of their risk to the system or their cost to the system. I think we would all want to see that, and I'll bring this back to why we're here. We're here because this is a mandatory product for drivers to have, so the government has a role there, and there's a problem with rates; the public perceives the rates to be too high and out of control, so government's trying to design a product that can be delivered to the public at the right premium rate.
We all, when we look at that, want to make sure that the rates are reflective of good driving records and bad driving records. To me, that should be doable within a no-fault system the same as it is within a tort system. There's a cost to the system and there's a risk assessment to the driver, and the rates should reflect that one way or the other. I'm not sure why you were arguing the return to the tort as one that will help us see rates that are more reflective of driver risk.
Dr Pesando: The issue would be that in either a no-fault system, for the sake of argument, or a tort system the argument is the same. We want the risk premiums that are paid by negligent drivers to reflect the social cost of their behaviour. On that ground alone, if within a no-fault system the insurance premiums would be identical, so to speak, to the insurance premiums charged under a tort system, in the sense that the high-risk driver is severely penalized, the economic argument applies to both cases, just as we wouldn't want in the no-fault system to only compensate 85% in the context of therefore keeping premiums for high-risk drivers lower than elsewhere. It's the same logic.
Ms Lankin: Let me come at the question from the point of view of what we have to try and do, which is to produce a product which will have stable premium rates out there in the marketplace. One of the things we hear from certain aspects of the insurance industry, and this is refuted by the legal community -- we've seen numbers and we've been presented with information that would suggest that the reintroduction of tort, particularly without caps and particularly without the deductible, both verbal and dollar thresholds that are there, is going to reintroduce instability in the system and drive costs up in the long run. Do you have an observation on that from an economist's point of view?
Dr Pesando: As an economist, if you were to argue that under, for the sake of illustration, a no-fault system and under a tort system you manage to succeed in creating the exact equivalent incentives for bad drivers, then there should be no increase in accidents in a no-fault system relative to a tort system. I think that's a very big if, and I suspect that's where really a lot of the debate flows.
But the bottom line is, if you have a principle that says innocent victims ought to be able to fully recover their economic losses, then there may at some point be tension between that definition of equity and the insurance premiums that are collectively paid in order to ensure that such victims are recovering 100%, not 85% or 50% or any other number.
So the tension exists, and from an economic point of view the potential cost saving in the first instance involves ensuring that to the best extent possible we punish the high-risk drivers not only through the courts, if that's appropriate, but also through appropriate insurance premiums.
Again, I'm quite happy to acknowledge that we could keep premiums low by arbitrarily, let's say, awarding 50% of excess income loss, in which case the tradeoff can't be more clear: That is to say that we keep insurance premiums down collectively but we basically don't appropriately compensate innocent victims.
Suggesting that one wants to start with the innocent victim is the notion that elsewhere in the system, if one is a victim and loses, for example, in income earning capacity, that is replaced 100%. The moment we begin to treat automobile victims differently than, let's say, medical malpractice victims, then we're moving into an area in which, if you will, the ability to bring an individual who's an innocent victim back to his or her pre-accident state, at least as best we can, is being compromised in the area of trying to keep premiums down.
Clearly, controlling the costs in an insurance system is an important issue, and from an economic point of view that involves administration, it involves making sure that you do your best to control fraudulent behaviours, and most importantly, from our point of view, it involves making sure that bad-risk drivers pay the price.
Mr Sampson: Thank you very much, professor. I want to start off by saying I've been known to be a student of economics. In fact, I was reminded by one of my professors not too long ago that I wasn't a student long enough, and I thanked him very much for that comment. Afterwards, though, I kind of thought whether I should have thanked him very much for that comment.
But one of the things I've learned over the six or eight months I've been looking at this thing is that in spite of the theories one might want to have that would justify 100% as opposed to 80% or 90%, it all boils down to the fact that you can't have it both ways, unfortunately. If we pay more on the tort side for economic loss, we're going to have to take away from somewhere else.
I guess that begs the question, how does that leave the at-fault accident victim, who may need to have a certain amount of recovery expenses but because of the limitation on the policy will have to go on the public purse? I guess that begs the question, what's the economic theory behind that justification? Is it fair that the public purse should pick up the shortfall if somebody is left falling between the cracks?
Dr Pesando: Canada is noted for its safety net. In the event we're an at-fault driver, there are, of course, no-fault benefits with the appropriate deductibles, but the at-fault driver may in fact have to depend on other branches of the social safety net under certain circumstances, and that's what the social safety net is there for.
Mr Sampson: But is it fair then for the general public to pay for those expenses when what triggered the demand for those services was caused by an automobile accident that they weren't involved in? What's the fair economics of that?
Dr Pesando: That's a tougher issue. It comes down to should it be drivers, through their insurance premiums, or taxpayers at large who bear the costs for those who are at fault and who fall into the social safety net. If there were a way of raising the insurance premiums of that at-fault driver to try and recover, then that would be the route that economics would suggest is the most appropriate. As a general comment, you want the cost to as closely as possible reflect the events in question.
Mr Sampson: Right.
Dr Pesando: That's a fair comment.
Mr Sampson: It also basically identifies the whole dilemma that I think this committee has now realized we're facing. There are two things to be dealt with here: the balancing act between no-fault, basic benefits for somebody regardless of their fault, and basic benefits or benefits available to somebody based upon their fault or not being at fault. There's a balance there, and there's also a level of the two.
Dr Pesando: If I can use an analogy, if a criminal breaks into a jewellery store and we, the public, collectively pay the cost of incarceration and the court costs associated with putting this individual in jail, we don't go back to the jeweller and say, "Look, you weren't at fault, but you are in the jewellery business and therefore this is one of the costs of doing business," and therefore this incarcerated individual in some sense should be charged with a special tax rate that we put on jewellers. I think that if I started to think carefully about that line of reasoning, I would go back and say that if there really is an at-fault individual, there are certain costs we collectively pay, and the criminal justice system perhaps is the best example of that.
Ms Lankin: I suspect, however, the jeweller's insurance costs would go up.
Mr Steve Gilchrist (Scarborough East): Thank you, professor, for your oral presentation. I hope it isn't unfair to ask you questions about Professor Carr's report.
Dr Pesando: No, please do.
Mr Gilchrist: I'm just trying to resolve in my own mind an apparent difference of opinion he might have here from your presentation. In his section 29 he says, "There are good economic reasons for not providing 100% coverage for first-party insurance." Am I to deduce from that that you and Professor Carr are making a clear distinction between the rights and the income recovery that should be available to innocent victims, as opposed to those rights and the income recovery for the driver who's at fault?
Dr Pesando: Exactly.
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Mr Gilchrist: Okay. So you have no problem with there continuing to be an incentive for people to drive well, but knowing that their income might suffer if they are less than --
Dr Pesando: Exactly. As Professor Carr emphasized, there's quite a distinction between what is called third-party insurance, where I seek to recover economic loss, and first-party insurance, where regardless of at-fault there is a certain benefit that's paid. In order to contain the cost of the no-fault component, it is perfectly legitimate from an economic point of view to put in the kind of deductibles and coinsurance principles that permeate insurance as a whole. So there's no conflict between Professor Carr's views and mine on this at all.
The Chair: Thank you, professor, as I know we appreciate your presentation.
ONTARIO COALITION OF SENIOR CITIZENS' ORGANIZATIONS
The Chair: We now welcome the Ontario Coalition of Senior Citizens' Organizations, Mr Morris Jesion and Mr John Kruger. Welcome to the committee, gentlemen.
Mr John Kruger: Thank you. It's a real pleasure to appear in this room before this august body. I can tell you I've been in this room many times as a deputy minister, but generally I've been cut to pieces. I can only hope you'll be more sympathetic.
Ms Lankin: We'll be much more generous.
Mr Kruger: If you'll be gentle with me today, I would appreciate it.
The Chair: We're known for our gentleness.
Mr Kruger: Oh, you are.
Mrs Marland: There's life after the civil service.
Mr Kruger: Yes.
I should tell you, I'm here today because the co-chairs of our committee are fighting other battles. They're in Ottawa fighting the battle on pensions, they're fighting the battle on medicare, they're fighting so many battles, and I'm here. I'm a member of OCSCO and on one of its senior committees.
The people I want to speak about and address today are not seniors like myself. I'm relatively comfortable. But there is a group of seniors that you should be aware of, and the effect that automobile insurance has upon them.
First of all, OCSCO is an organization, it's an umbrella group that has about 500,000 seniors involved. There are some 80 separate units and it comprises everything from multicultural groups to unions to organizations such as native groups and so forth. So we represent a very broad range.
We would point out that seniors are automobile drivers, and there's one point that I would make. To a senior, the demand-responsive transportation ability that a car gives gives independence. It gives them the sinew of their lives, particularly the group I'll now speak to.
In our organization, most of the seniors are at least 70 years, generally around 75 or older. A few lucky ones might have a bit of a private pension plan, but it's not adequate at all, because it was negotiated in the days before those things were rife. Very few had the ability to get into the RRSP legislation. They rely on OAS, Gains and a few on CPP.
We're under attack. This group is under attack from many sources. There's the proposals on medicare, which is a very great concern. There's the changes to the drug benefit plan. There's proposed changes to the tax laws. There's this GTA report, where a lot of them are living in their own homes and they're wondering about the reassessment of their properties. There's the proposed cuts being made to public transit, especially for the disabled, and there's the impact of what's happening in the disabled section of the CPP. So it's not that anyone within our organization with this very special group of people feels that government is going to cut their throat, but it's all of these little nicks that are going on. We can slowly bleed to death.
Automobile insurance, for this special group of people, has become a societal issue. The IBC, Insurance Bureau of Canada, is there to protect the insurance companies. It's the government that is there to protect them. Competition between insurance companies will no doubt result in the more active and better-managed companies surviving, and no doubt that will mean more consumers for them, more customers. But the point could well be reached where the profit within this type of insurance is so small they'll get out of it.
In the end, there is, as we see it, a push-pull going on. There's the push for profit, understandably, by the shareholders of the companies, and there's the pull to keep the rates low, and that's something that affects the group -- you, ladies and gentlemen -- and it affects us. We think that conflict cannot be easily resolved, indeed, if it ever can.
To suggest that seniors on a fixed income in this group can now shoulder some of the things that you've heard, the 40% increase over five years and that, is just going to force them out of the market. It's just not on. That's the reality.
On the premium side, the least which should be done is to more tightly regulate insurance rates for seniors. Seniors don't drive with the frequency of younger drivers. Many avoid expressways, they generally don't drive at night, and you won't find them driving around in souped-up cars. There's the odd one who might not have grown up a little bit who might be in a souped-up car, and I'm perhaps in that category, but most don't. They acknowledge that their behaviour is such that there ought to be a special consideration in the rating categories for these people other than the fact they happen to be 65.
You see, we have a lot of the seniors now helping seniors, and that's going on quite a bit. I'm one of those. I'm a young senior. I still ski the double diamond hills. But the amount of driving I do for the activities, such as -- well, they're all volunteer activities -- puts me over the 16,000-a-year kilometre range, so I can't get a good rate, and a lot of our seniors, our young seniors, are in that category.
So we ought to look in the profile of individuals as we look at insurance. It's just been the statistical base. The IBC -- I've always been a critic of it. But we should look closer at that and think of categories for this special group of people.
On the benefit side, income loss is not a major issue to seniors. We all get pensions, and whether we're injured or not, we're going to keep on getting those pensions. It's the restoration of the quality of life that is the greatest concern of all, and the benefit of $185 weekly after 26 weeks, as we read it, hey, they've got to have that benefit almost immediately, because a lot of these seniors live alone.
I took off some facts from the human resources in the United States. We don't have applicable data here in Canada. I took it off last night on the Internet. I think some of it would be of interest to you.
By the time these seniors in this group reach 80 years of age, there will be 259 women to 100 men. That's pretty well applicable also to Canada. Sixty-eight per cent are attached in some way with their families, and generally they live within 30 minutes of their families. They visit the families for babysitting and all of the other things which give a quality of life to these seniors. Their families are very important to them; what else have they got but what they're going to leave behind? While a group attempt to take public transit wherever they can, there's the fear of being mugged and all these things, and we find out that some 40% use their auto. So to them that is a very essential part.
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Now, while we recognize that the higher the threshold, the more the rates are going to go up -- because, it's quite right, there has to be this balance -- the dramatic drop that's being proposed by this legislation, without an accompanying drop in the premium rates, just doesn't make any sense to us, doesn't make any sense at all. If you're going to drop what you've got now, you should have some benefit in return and that should be on the premium side; and if you can't do that, for goodness sake, leave it alone.
The right to sue is in this report because it's been a long-standing position of our association to have the right to sue, but let me explain what is meant by that. The association does not really go out on a limb to support the legal system by saying the right to sue ought to give lawyers more work; they're not saying that at all. Their concern is that it's only by that, by some means like that, that they might get restored the quality of life in an accident where they're not at fault. So when they talk about the right to sue, they look for that as a convenience. They don't really understand thresholds, they don't understand that, but they look upon that as a way to compensate them if they are not at fault.
Let me give you an example. This is happening all the time. This is on the property damage side. Your car is parked -- and this has happened to our members -- and somebody comes down and hits it and knocks it into a total loss. Well, to that senior that is more devastating than it might be to other people. In the first instance, they've had an accident under no-fault. Up go the premiums. You might find the odd company where it doesn't, but they're very hard to find. Up go the premiums because they've now had an accident under no-fault.
Secondly, the cars they drive they have maintained for a very long period, and the cars today are very sophisticated. You just don't do the odd carburettor adjustment on them and keep them that way; they're very expensive. It's in the interest of the insurance company to pull out a book -- and I'm not critical of this -- and say: "That car's worth that, period. Boom. Go away, don't bother us." But the ability of capital asset appreciation by seniors, who receive about 1.4% increase a year -- that's the present rate -- on their pensions, just doesn't permit them to get the type of car they might have had, that they babied before. So somehow there's got to be some device, be it even arbitration, to force this, or some court of appeal they can go to. I know you have the arbitration system, but I think somehow there should be a recognition that in property damage claims this should become an essential part of it, because there's nothing more infuriating to a senior -- I can tell you this -- than to be there and see their automobile wrecked and it wasn't their fault. So they want revenge and they want to be compensated.
Finally, the question of public ownership: We've talked about this at length in our organization and we believe that no insurance lobby and no philosophy of government can reduce auto insurance rates. We believe that; it's a fact of life. We have looked at the attempts by two governments, and now a third. It isn't going to happen; it's too complex.
The automobile is such an integral part of life and the economy. You've only got to look to the GTA report and you will find that in manufacturing automobiles the manufacture and the spinoff in the GTA area are second only to Detroit. So automobile insurance is a very special type of insurance and maybe it goes beyond the normal rules of insurance. That's something which should be looked at.
We believe that auto insurance rates will continue, and every time anyone says, "I'm going to reduce them," or even, "I'm really going to stabilize them," if they say, "I'm going to attempt to stabilize them," fine, but if they say they're going to do it, that's like walking into a field of quicksand; it'll kill you.
For these reasons, we believe there's a very slippery slope that we're going towards and we may end up in public insurance. I think the question has to be whether or not this isn't a very special type of insurance, as different to home or other commodities, because the automobile is such an integral part of our lives.
The good news is that all these seniors are going to die. Sooner or later we're all going to die, everyone in this room, and the group that are in their 70s to 80s. The bad news is we're going to live longer and we're going to be around and we're going to drive automobiles. This is going to be a continuing problem for us. Thank you.
Ms Lankin: Thank you very much, John. It's a pleasure to see you again and I appreciate your organization's presentation. We had a presentation a couple of days ago from a senior, a man who is a veteran -- in fact, he's a constituent of Mr Gilchrist's -- who came forward and told us about the fact that he had a clean driving record, absolutely clean, no tickets, no speeding violations, no accidents, for 59 years; not only driving cars but, as a veteran, trucks, jeeps and tanks, and he never had an accident with any of them he told us.
Last year, he in fact had two minor accidents, one which was not his fault and one which he admits was. It was a fender-bender; you know, a bump into the back of a car. But he admits that was his fault and that he was distracted for a moment. But not extraordinary accidents or anything that showed evidence of bad driving habits or a bad driving record at all. He now can't get insurance. He's been bumped into Facility management and the cost is beyond his capacity and he and his wife, living out I think in Mississauga someplace need their car to --
Mr Gilchrist: Scarborough.
Ms Lankin: Scarborough? Sorry. They need the car; I think it's to visit his children who may live in Mississauga. There was a reference to Mississauga, I think, but in any event just for daily life, and he's absolutely devastated by it. Now that's a case where in fact he did have two accidents. We tried to get at a definition of what is a good driver from the insurance industry and not one of them will answer my question because in fact any sort of violation -- lots of people will get a speeding ticket. Well, that's enough to make you an at-risk driver from the insurance industry's point of view. I wonder if you've any thoughts on that and how that corresponds with also looking at special rates for seniors.
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Mr Kruger: Of course, what you've described I hear constantly in our organization. It goes on all the time and that's the way. As long as the insurance companies -- you see, the statistical base that they must use and have used for many years is an old statistical base whereby they take all of the premiums, all of the losses and they come to certain arbitrary rules. They don't look at the profile. You'll find the use of the word "devastating" within this brief. To the senior group that I've talked about here, that we represent and advocate for, they are the very people who are devastated because if they have even one accident, up goes the premium. If the car is wrecked at the same time, and it might be a 10-year-old car that was working perfectly, they can't replace it easily. So they're out in the market. And I'll tell you, if they are in any way handicapped, that's an added burden on it. So it goes on. There are going to be winners and there are going to be losers; we recognize that. All that we're saying is you should look at our group very carefully and there should be a very special rating category, because the group is going to grow in time.
Mr Wettlaufer: John, it's good to see you again. You've been around this issue for a long time.
Mr Kruger: Oh, you better believe it. I've got whiskers on.
Mr Wettlaufer: Yes. You'll be pleased to know that we are considering some kind of a seniors' insurance plan, but we don't know what form it's going to take.
Mr Kruger: We would love to be able to help you. In fact, I made the representation to Mr Sampson that there should be a special advisory group of seniors set up so that we might be able to advise just what are some of the problems on an ongoing basis.
Mr Wettlaufer: Some of the suggestions you have mentioned here are certainly going to be taken under advisement, as well as a number of others. The one thing that I was a little surprised to hear you talk about was full tort and government automobile insurance, because I didn't remember you being a fan of either. Of course you're aware that in the case of the government automobile insurance we in Ontario here have more automobiles between London and Toronto than most other provinces have throughout their entire province; and even in those with government plans, the premiums are not significantly different from Ontario's, especially when we consider coverages.
The issue that I want to address, however, is the issue of tort versus no-fault. What we're trying to do here with this new legislation -- it's not even legislation; it's draft legislation -- is the issue of affordability and coverages: What can the average person afford and what kind of benefits does the average person expect? I realize that it's a very delicate balance, but the whole issue is a compromise. You know that probably as well as any of us, with your past history.
Mr Kruger: First of all, on the question of being a fan of tort, no, I haven't been a fan of tort. This is speaking personally and also on behalf of the organizations. To find the words within the threshold that will keep the lawyers at bay, so to speak, it's becoming even more pressing that we be very careful about tort now, particularly if we go to contingency within the legal system. You're going to see a field day. That's why one of the things we've said is that no-fault -- no, I've not been a fan of no-fault either. You've got to try and strike a balance, and the balance that we have now with the limits where they are, one of the things that you might have to look very seriously at -- and I hate to say it -- is the meat chart. You might have to go as far as looking at that. As repugnant as that is, it might be the only way, because unless you control the benefits, you're never going to control the premiums. That's for certain.
On the benefits side, when I saw the benefits go down to the level that they are now, speaking now as an individual with some knowledge in this area, it didn't surprise me to hear some of the companies come forward before you and say that you're going to have a 7% increase, an 11% increase each year. It's inevitable. So what you've got to do, you've got to make that threshold as high as it can be.
The reason you have tort is to take care of the catastrophic losses. I remember, when we were in the auto board, the number of witnesses that we had, and a lot of them from the United States, said, "You don't know how lucky you are in this province because you've got OHIP," and there's a relationship they didn't have on the catastrophic losses.
I would think that if you're going to do that, don't muck around with the level of no-fault you've got. Try and tighten up your threshold, and for our people, we would be just as happy to see some other regime where there is a catastrophic loss, and it may have to be the courts, to take care of our seniors just to restore their quality of life. On the other side, per unit there are more losses that occur in the property damage field than there are in the public liability field.
Mr Crozier: I'm particularly interested in the rates of insurance premiums for seniors because in my riding of Essex South I have a high percentage of seniors compared to many areas in the province. Having said that, I would hope that when we're finished with this exercise, one of the objectives, as has been mentioned by Mr Sampson, is that there will be a more competitive market, and I would hope that as part of that competitive market, that these suggestions of yours can be considered, that perhaps seniors, taking all the actuarial information into consideration regarding them, may in fact get rates that will reflect the lower usage of automobiles and so forth.
But what I wanted to get your comments on, and I'll make just a couple, is on the side of when you said it's devastating to have to replace a car when you only get actual cash value. There may be some other economic factors that seniors face, but certainly those are economic. There are working people in this province, the working poor, who from an economic standpoint are no better off than our seniors. I think we have to recognize that they too face the same problems seniors do; it's just that there's an age difference. I wondered if you had any comment on that.
Mr Kruger: That is quite true, and a lot of these people, the working poor, are the children of the seniors that I speak about and there is as much concern in the seniors for their children as for themselves. However, the working poor still have a lifespan ahead of them and they still have some capacity and ability to accumulate perhaps more assets, to be able to get a job, to do those types of things. A senior isn't; it's the end of the line, period. I suggest to you that on balance it is more devastating to them at that period in their life than it is to the working poor. Granted that for the working poor with a young family, it is devastating to them at that time, but they have a capacity to get out of it, at least an ability or the chance that the senior doesn't have. That's what makes it different.
The Chair: We appreciate your presentation and your input into our deliberations.
Mr Kruger: It's a pleasure to appear before your committee. You have been very gentle and kind.
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CANADIAN ASSOCIATION OF REHABILITATION PROFESSIONALS
The Chair: We now welcome the Canadian Association of Rehabilitation Professionals, Ms Gram.
Ms Joanne Gram: I'm Joanne Gram. I'm a partner in a rehabilitation disability management firm called Associative Rehabilitation. I've been doing that for 15 years. I'm a member of CARP, during those years, which is the Canadian Association of Rehabilitation Professionals. Previously, I acted as the treasurer for CARP Ontario, and now I'm the president of CARP.
We've submitted various presentations on OMPP, Bill 164, previously, and we've worked in all four systems. Today I am here on behalf of the Canadian Association of Rehabilitation Professionals. What I`d like to do is give you an introduction on what the Canadian Association of Rehabilitation Professionals is, what we do, what our professional members do for a living and then talk about some of the recommendations and a summary at the end.
The Canadian Association of Rehabilitation Professionals, CARP, has been established for over 25 years as the leading association for rehabilitation in Canada. Presently, there are approximately 1,400 members in the Ontario society of CARP. To many in the field of rehabilitation, there are different meanings of who the various professionals may include. You've heard presentations from lawyers, insurers, different interest groups, and what I'd like to do is give you a definition of what our members do so the basis of my presentation may be established.
There are basically two distinct groups within CARP. One is the vocational rehabilitation group and the second is the medical rehabilitation group. Our professional members, who are accredited as such, include vocational rehabilitation case managers, vocational counsellors, rehabilitation consultants, vocational evaluators and job placement specialists. CARP's associate members are made up of the medical rehabilitation field. They include -- I may miss a particular group -- mostly psychologists, occupational therapists, physiotherapists, chiropractors, medical doctors and medical specialists. Again, those are our associate members.
Vocational rehabilitation is a systematic process which assists persons who have limitation in life functioning as a result of accidents or conditions such as sensory impairments, mental illness, developmental disabilities, chemical dependencies and/or physical disabilities to achieve their personal career and independent living goals. Clearly, today we're here to speak about the group we serve, being victims of accidents.
Vocational rehabilitation and case management involve a number of different things, such as counselling, communication with the members of the rehabilitation team, goal setting, growth or change through self-advocacy of the disabled, psychological, vocational, social and behavioural interventions.
The special techniques and modalities utilised within this process will include, but are not limited to, a variety of different things and I'll tell you exactly what those are. They are assessment and evaluation; vocational or career counselling; individual group counselling sessions; case management, referral and service coordination, basically; program evaluation and research; interventions to remove environmental, employment and attitudinal barriers; consultation services among multiple parties and regulatory systems; job analysis, job development and placement services; and the provision of consultation about and access to rehabilitation technology.
CARP follows a clear set of guidelines, standards and code of ethics and promotes these among our members. CARP offers to its members an accreditation process and a certification process which are for the sole purpose of CARP in its efforts to advance the rehabilitation of all persons with disabilities as outlined in its incorporation documents. We represent the injured people. Those people are our clients.
Our code of ethics deals such issues as conflict of interest, who our client is and effective, timely delivery of service. The objectiveness of that service is also important. CARP members are employed in these processes in a number of private and public sector organizations. With this as a basis, this is how I make the board of directors' summary and conclusions about the new legislation.
We've reviewed the draft legislation presented by Rob Sampson and have the following comments to offer.
We believe that there have been good solutions to the problems at hand with the auto insurance industry presented in the draft bill on automobile insurance. However, we reserve our comments to the areas being vocational rehabilitation. We can't possibly comment on financial analysts/economic issues.
Our position is that the $75,000 with an eligibility to collect these benefits for 10 years proposed for medical and rehabilitation expenses is likely an adequate amount for the average type of case. I believe there's probably been a lot of research into this and I know that a lot of cases never reach anywhere near that amount of money, so it's likely an adequate amount. It would appear that additional costs over and above the $75,000, if they are required, if a case slips through the crack of the definition of "catastrophic" and it is necessary to the rehabilitation of the person in question, would be available in this system under tort.
We agree that the insurer be required to pay all reasonable and necessary rehabilitation expenses that reduce or eliminate the effects of any disability resulting from the accident and allow the person to lead as normal a life as possible. That's taken directly from the bill. It's not unlike the definition of what's necessary for rehabilitation under the other systems. Examples of these expenses include vocational training, life skills training, family counselling etc.
What we believe, however, is missing in this definition is a definition of what "reasonable" constitutes. You could ask several different interest groups, several different insurers, several different lawyers what "reasonable" means and they may all have a different definition of that. I think it would be valuable to have that understood by all.
A $1-million cap for catastrophic cases is absolutely necessary. It is our position that the definition of "catastrophic" should be reviewed again with medical professionals such as physical medicine and rehabilitation specialists as well as occupational therapists, to ensure that it is inclusive of the group of people requiring an increased amount of benefit for medical and rehab expenses. That would look at the medical definition of "catastrophic" as well as the functional definition of "catastrophic" through the OT group. It is also in need of review to ensure that the category is clear to everyone involved, that being the insured, the insurer and the rehabilitation provider.
We agree that expenses for case management should be covered as a service, as well as vocational counselling, social counselling, family rehabilitation, as we said earlier, and as outlined in the draft. We like the fact that responsibility is also placed on the insured to participate in rehabilitation and to seek employment.
We feel that section 42 is appropriate. It states: "Before an expense in respect of which a medical or rehabilitation benefit may be payable is incurred, the insured person shall submit to the insurer, (a) an application for the benefit; (b) a treatment plan in the approved form; and (c) a statement by the person's health practitioner authorized by law to treat the person's impairment that the expense is reasonable and necessary for the person's treatment or rehabilitation.
We would like clarification what "a treatment plan in the approved form" is in terms of who would be responsible for developing that, such as the IWRP, which is the individualized written rehabilitation plan, which is what CARP would endorse as a reasonable treatment plan. I think it meets some of the criteria but it adds some as well, as treatment plan is defined in the draft bill.
An IWRP, which is the individualized written rehab plan, is a comprehensive and logical plan for rehabilitation. It reflects the quality of the initial evaluation, rehab planning and the ongoing rehabilitation process, and makes this process explicit, as well as the treatment plans included in it. The IWRP also makes explicit the contractual nature of working partnerships with the client and the other participants of the rehabilitation team.
The format which is endorsed by CARP is basically the following: The long-term planning or the long-term goal is explicitly outlined in this treatment or implementation plan. The long-term goal that would be considered appropriate would be (1) a return to work with the same job, same employer, same occupation; (2) return to work with the same employer in a modified work situation; (3) return to work with the same employer in an alternative job.
The second choice in the hierarchy, as we call it, of the return to work would be return to work with a new employer in the same occupation; return to work with a new employer in modified work; and return to work with a new employer in alternative work.
The third would be self-employment and encouraging that as a treatment plan, again, if that's necessary to change occupations.
Fourthly, an education or retraining program.
And, not lastly but it ends up being last on the hierarchy of work, there are people who either have returned to work and require an IWRP treatment plan and/or will never return to work, and those people come under the category of social or life adjustment treatment plans.
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I wanted to talk to you about the hierarchy of work so that you could see that there's a definite process in rehabilitation planning. It's not a haphazard development that people have just pulled out of the air. There is a process and protocol that should be followed, both in terms of the people who are undertaking the service with the clients and with the rehabilitation team and also with the clients themselves.
There are different stages of rehabilitation as well and it's important to recognize these in planning and implementing treatment. The five rehabilitation stages acknowledged by CARP are: (1) the assessment stage; (2) the adjustment to injury stage; (3) job readiness-preparation stage; (4) job placement stage, and (5) the return to work or the activities of daily living follow-up, again for that social rehabilitation category.
The IWRP clearly outlines -- and I think this is the part that's similar to the actual proposed bill -- there are interim objectives that the client must achieve. So there's a very stringent goal and there are objectives that the client must achieve to reach the next stage in the vocational rehabilitation process or the treatment plan. There's an action plan which includes the services and mutual responsibilities necessary to help the client reach those goals, understanding that the clients themselves are responsible for undertaking this as well.
There's an evaluative component to measure successful accomplishment of objectives. In other words, if there's a treatment plan being suggested, the treatment provider is being asked to give definitive outcome measures as to when the treatment will be completed, the time frames for that and the anticipated hours or estimated costs that it will take to undertake this program.
Lastly and probably most importantly in the development of the IWRP is the accountability factor. Generally the life of any one IWRP is approximately three months. It's signed by the client, who is the injured person, and the significant members of the rehabilitation team, indicating their willingness to comply with the intent of the action plan. The signatures of the client, his or her attending physician and/or health practitioners, the rehabilitation consultant and the insurer are sought. Again, this is to reinforce that the treatment plan is agreed upon by everyone involved in the rehabilitation so that it will be a smooth transition and hopefully the rehabilitation will not be stopped and started.
That brings me to one of the major concerns that the CARP board of directors has at this point in time, the use of designated assessment centres as a dispute resolution system. It's not clear to us how this system will work any better, and we're concerned about the effectiveness and the timeliness of the DAC system. We wholeheartedly agree that a dispute resolution system needs to be in place but are concerned that the DAC is not the most efficient method to undertake this.
Rehabilitation is most effective when it's well coordinated and executed in a timely fashion. I'm sure you've heard the benefits of early intervention, and these cannot be stated enough. A system such as the DAC could be and is in the position that they will act as a stop-start mechanism in rehabilitation. We do not feel this is appropriate, and it's our position that this will result in increased costs both in terms of rehabilitation and increased income replacement benefits. If the goal is to keep these under control, we do not feel that the DAC system will be appropriate for that. Payments for medical and rehabilitation benefits should not be halted pending the DAC resolution system.
Lastly and yet most importantly, CARP is the organization which deals with accreditation of our members, ethics and quality and standards of rehabilitation service in Ontario. We feel that we should be consulted on issues such as the DAC process and any issues related to case management and vocational rehabilitation that will formulate this legislation.
Overall, we would like to extend our compliments on the time, effort and consideration to all groups that was given for what appears to be a very sound start on the resolution of the problems at hand. We urge you, while you're considering the presentations, to look at who's presenting them and ask for substantiative evidence as to the generalized comments that some people might make about increased costs on certain things. Thank you.
The Chair: If we could move to a one-minute round of questions, could I start with the government.
Mrs Marland: Thank you very much for your presentation. I actually have a number of questions, but now that I'm limited to one minute --
Ms Lankin: Twenty seconds of which has gone.
Mrs Marland: I'll do it to you. One of the things we've now been hearing over this past three and a half days at this point is the whole question of -- who does what to whom, I think, is about the easiest way to put it.
Ms Gram: Exactly.
Mrs Marland: And of course only one person pays at the end of the line. These aren't my words, so I don't want it to be attributed to me, but certainly it's come out, not in exactly these words in these hearings but certainly in the halls and certainly on phone calls that I've been receiving, and that is that these rehab centres have just mushroomed like Topsy. In fact, there was a suggestion that if you want to have a licence to print money, you open a rehab centre. The other part of that is the suggestion by some of the groups that have been in front of us which is to have an accreditation system for these rehab centres.
Since speaking on behalf of CARP, you're speaking on behalf of all the professionals who in fact are involved in the rehab centres --
Ms Gram: No. That's why I clarified at the onset. CARC, which I think you heard from yesterday through Dr David Corey, represents rehabilitation centres. CARP, very similar but yet there is a distinction, represents vocational rehabilitation consultants and case managers. There is a difference. They may work for rehabilitation centres or be part of rehab centres --
Mrs Marland: That's what I mean.
Ms Gram: -- but it's a distinctly different field. Rehabilitation centres -- and I think this is a very important point, because I've been watching the hearings too -- I'm very tired today, having stayed up late last night -- and was enthralled with all the people who were on yesterday. I'm really concerned about making sure that people understand the definitions and that there are differences between the different categories and the different things that are going on. I'm not sure --
Mrs Marland: Look, I'm going to be out of time, so let me just ask you the question.
The Chair: You've asked already.
Mrs Marland: But some of your 1,400 members will be working at rehab centres, right?
Ms Gram: They could be, yes. I can't tell you how many.
Mrs Marland: Would you advocate the accreditation of rehab centres so there is a standardization throughout?
Ms Gram: I guess I need to know a bit more about what accreditation process -- I know personally what they're recommending. I'm not sure whether CARP would advocate that or not.
Ms Castrilli: The issue of case management has come up before. I wish we had more time to explore it, but I wonder if you could give us some sense of what case management actually entails. We've had some individuals come before the committee and say it's expensive, it's irrelevant, it's unnecessary.
Ms Gram: All they do is make telephone calls. I think I heard that at one point.
Ms Castrilli: I won't get into the details, but it is a view out there that it's adding to the cost.
Ms Gram: I realize that, but I'm a strong advocate, obviously, through CARP, that case management can also be a very strong benefit to the rehabilitation process. If there's someone who understands the resources in the community, which rehabilitation clinics are effective in terms of their outcome, which physio centres are effective, we can work with the attending health practitioners as a case manager, again distinct from vocational rehabilitation consultant, to coordinate those services to get the best outcomes possible.
Early intervention, again, is something that cannot be underestimated, and I fear that all the discussion about case management -- is it viable or isn't it viable -- the idea of early intervention may get lost in the shuffle. Obviously the two points are critical. You need early intervention to be successful, because getting involved eight to 10 months after the accident isn't going to be as successful as very early on, and two, you need that process to be centrally coordinated so the costs are not driven up by ineffectual treatments in clinics.
I think it's the obligation of the person who's coordinating those services to discuss the actual treatments in question, such as through the IWRP, outline what the treatment plan is, what the cost is, and most importantly, what the outcome measure is. I think the rehabilitation clinics are taking a very strong step towards measuring outcomes and I think that's an important part of deciding what treatment is appropriate. It's not to say all treatment's going to be effective, because it isn't.
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Ms Castrilli: With respect, this is an important point. I just want to ask you, does your organization have any documentation on what is effective case management? Could you share any of that with us?
Ms Gram: The only thing I brought with me today is our code of ethics which talks about timely effective and some of the parameters and the service delivery models of case management. Again, the two are different, and we have members of both.
Ms Castrilli: So you really don't have anything.
Ms Lankin: I'm glad to hear that you've been watching the hearings so you have a sense of the dilemma that the committee faces with the various points of view that have been brought forward, and a lot of finger-pointing going on at different aspects of the system in terms of what is contributing to increasing premium rates.
Yesterday, I talked about a situation of a constituent with acquired brain injury where his wife was a social worker who happened to be able to take on case management functions which helped us be able to make a decision, as a province, to relocate him from a US-based residential situation to services here in the community at home with his family and much cheaper.
So effective case management, as you say, can in fact both contribute to early identification for treatment plans to effective rehabilitation and cost-effectiveness.
I guess what I'd like to ask you then is, given what you've heard and what this committee has heard from some parts of the insurance industry, in particular that one of the major contributors to increasing premiums under the existing legislation is the increased cost in med rehab, can you help us understand why that's the case? There are two things particularly I'd like you to touch on.
In part, I think we understood a lot more about early intervention and the benefits of rehabilitation, and people are getting help now, which costs money; in the past they might have found themselves in other parts of the public system, and that's not identified as a cost transference. Secondly, this question about whether or not there are commercial interests which are driving the costs up in terms of the expansion of the number of operations and the ethics under which they operate.
Ms Gram: I've been really uncomfortable with the comments surrounding the medical and rehabilitation costs going up. I believe that the reason I'm uncomfortable with that is because, as we've heard today and other days, there are so many different groups encompassed in that medical and rehabilitation cost section that unless I were to know, and I think you should be asking, what parts of that have gone up significantly -- is it physio, is it rehab centre, is it cognitive therapy, is it case management, exactly what have -- I'm not sure anyone's going to be able to tell you. Perhaps the IBC will, I'm not sure. But I think those things are really important to look at, rather than lumping everyone together and saying everyone's ineffectual and they cost too much money.
I don't think I can comment on why the costs have gone up so much, except to say that in the pre-OMPP system at $140 a week and $25,000 in medical and rehabilitation expenses, there weren't a lot of people being rehabilitated. They may have gone to physiotherapy, they may have waited months and months and months in the public system to get their treatment, maybe not, maybe they got right in, but the sheer economics of it were that they cannot stay off work.
When the benefits increased, and they should have, under OMPP, I think that's when you saw the medical costs and as a result of medical interventions and rehabilitation being available, that's when you saw the surge of clinics, and clinics treatment facilities, case managers, all the rest of it. Again, I think it's up to the people that are managing the case, the case managers, to be able to establish what outcome they expect to have.
The other thing I'm uncomfortable with is that I haven't heard, in comparison, whether the income replacement benefits have been affected as well by good rehabilitation.
You're looking at the bad rehab and everybody wants to talk about everyone that's bad and points fingers and all the rest, but no one's talking about the companies that are good, doing good solid work out there, that are getting very positive results for the injured parties.
The Chair: Thank you very much and we appreciate your input to our deliberations.
INDEPENDENT DRIVER EDUCATORS ASSOCIATION
The Chair: We next have the Independent Driver Educators Association. Welcome to the committee.
Mr Sohanlall Racktoo: My name is Sohanlall Racktoo. I'm the vice-president of Independent Driver Educators Association. Amir Kanji is the secretary-treasurer of this organization.
Since this is a new organization, I would like the committee here to have a feedback of what it's all about. It was established approximately two years ago. Its membership is approaching about 100. It is a member of the Driver Education Advisory Committee. It has affiliated itself with many safety-oriented organizations, which include the Driving School Association of Ontario; CPDEA, which is the Canadian Professional Driver Education Association; and the Ontario Safety League.
First, what I want to do here is to give you a feedback of what we think should be part of this legislation from an education standpoint. As we look at it here from an education standpoint, we have lots of difficulty with respect to dealing with the insurance companies over probably the past five years. This information I'll be bringing here to you is a grouping of all the different entities that have gone on from a membership, as well as the public, perspective.
I'd like to start from the first thing, the auto insurance and road safety. On the first page, if you look at it here, is "A Road Safety Approach to Changes in Auto Insurance Regulation."
Proposal 1: Driving instructors' perspective to promote and expand driver training.
Proposal 2: Driving instructors' perspective to expand and promote novice drivers with respect to competency and safety in the operation of motor vehicles.
Proposal 3: Driving instructors' perspective to control uninsured motor vehicles in the province of Ontario.
If we go on to the next page, proposed changes to the present no-fault auto insurance regulation are seen by the public, as well as driving instructors, as a promising step in the right direction. We, the executive and members of IDEA, in addition to these proposed changes, would like this committee to further expand on these proposals to cover the important areas which promote road safety. The expanded areas to be covered by this committee are as follows:
Proposal 1:
(a) Legislative provision should be instituted which stipulates that any insurance company which underwrites auto policies must also include driving school coverage.
(b) Legislative provision must be instituted whereby driving school insurance should be accessible to experienced and non-experienced driving instructors.
(c) Legislative provision should be enacted whereby insurance companies would not be able to discriminate between driving school organizations and driving instructors, thus issuing exclusive clauses which destroy our ultimate goal of road safety.
(d) There should be a clearly defined legislative provision stipulating the criteria for assessment of driving school insurance based on merit.
Proposal 2:
(a) Provision should be legislated that a clear path is chartered for novice drivers upon entering and should continue until they are established within the system.
(b) Provision should be legislated that insurance incentives given to novice drivers who complete an approved driver education course must be expanded to cover all novice drivers to eliminate discrimination within the system.
(c) Provision should be legislated that novice drivers must earn insurance incentives granted by insurance companies, and in return there should be provision stipulating in writing when these incentives and percentage would become effective upon purchasing of insurance coverage.
Proposal 3:
Provision should be legislated whereby a system is set up that all cancellation of auto policies must be reported to the licensing control branch at MTO by all insurance companies. The licensing control branch must notify the owner of the vehicle of his or her insurance status, and a valid insurance document must be produced at an MTO office within a stipulated period of time. A penalty should be levied for non-compliance with these regulations.
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The challenges that face us ahead, from an education standpoint, are: licensed drivers in Ontario number approximately seven million; registered vehicles in Ontario number 6.5 million; the number of fatalities is approximately 1,000; the number of injuries in this province is 90,000; the number of property damages is 168,000.
The overall cost to citizens of this province is a staggering $9 billion, which includes: 800,000 hours of police time; 150,000 days of hospital care; 74,000 visits to the emergency room; 38,000 ambulance calls; 9,000 fire department responses.
Looking at the challenge and analysing its cost, it's unacceptable and, as such, must be addressed by legislation of insurance delivery in the province of Ontario.
Road safety starts with teaching a novice driver, and driving instruction is a vital part of their education. Insurance is a tool of the trade and must be recognized if we are to continue sustaining growth and enhance education in road safety.
Ms Castrilli: Thank you very much for coming here. I agree totally with you that the way to reduce costs is to begin with appropriate education by qualified instructors. I confess I'm not at all clear what happens with driving schools and insurance. Since your first proposal deals with the kind of legislative provisions that you want to see, could you elaborate on what the actual situation is, how you are covered, what kind of insurance you're required to buy, what the efficiencies are with that?
Mr Racktoo: The actual situation at the present time is that the auto policy that's been underwritten is almost equivalent to the driving insurance policy. So what has happened is that it's reached a saturated point. As a result, it's easier for an insurance company to underwrite an auto policy, which is at less risk, and as a result there are fewer and fewer insurance companies underwriting driving school insurance. So what has happened is a stagnated system. It has come to where the insurance company looks less at underwriting a driving school policy in favour of those with less risk factors.
Ms Castrilli: So is the situation that your individual instructors get insurance, as opposed to the driving school? Is that the concern?
Mr Racktoo: This is one of the concerns that we have: the stipulation within some insurance companies that gives an isolated, exclusive clause. What happens here in this situation is that you have to be part of that association. As a result, you have to agree with all the terms and conditions; if not or if there's difficulty, that insurance company doesn't issue a blanket policy to anyone else except in that association.
So what we're looking at here is that there should be a certain degree of generality within the insurance company, and if they want to offer that exclusive clause to a particular association, that's okay. But there should be a general clause, because safety involves the whole sphere, and by isolating it, then they are showing special preference for one particular organization, when in turn we are all in there for the same cause, which is road safety.
Ms Castrilli: What would that general clause say?
Mr Racktoo: For example, we have an organization at the present time, over the past probably six years, and if we call up this insurance company and get some information, they couldn't underwrite a policy for a driving school; it's not been stipulated, but it's always been refused. "I'm sorry, you'll have to go through this particular organization before, and this organization has to send written documentation to that particular company or the broker before this policy can be underwritten."
Ms Lankin: I'd like you to continue explaining this to us, because I have to admit that I don't quite understand yet what that organization might be. Is this an industry association and there are competitive industry associations? Could you maybe identify the problem just a bit.
Mr Racktoo: There are two parts within the driving school industry. There's the smaller driving school and then you have the approved school system. Actually what is happening here is that the larger schools have an exclusive clause within the industry, and the smaller schools are not being treated from the same standpoint. In other words, the smaller schools are subjected to higher premiums, which are almost three or four times what the larger schools or larger associations are being charged.
Ms Lankin: Your second set of proposals deals with novice drivers who have gone through education programs, and it refers to the fact that in many insurance companies' plans there are discounts or incentives for novice drivers who have completed approved driver education programs. You're saying it should be expanded. I'm assuming this is the same issue expanded to include people who have gone through your schools. I'm sorry that I really don't know anything about this part of the industry. Why are some schools approved and others not? What's the process? Why would it not be possible for the smaller independents to become noted as approved schools? Is there a difference that we should be concerned about in terms of quality? How has this all evolved?
Mr Racktoo: We are all licensed by the province under the Ministry of Transportation. We are all licensed instructors. There are two parts in the system: One is an approved system and the other part is a non-approved system, where the driving instructor doesn't have a classroom but has all the facilities and an office. For economic reasons and because there's saturation in the market, many of these independent driving instructors who have everything possible to continue in this capacity have joined with the approved school system.
The insurance company has been represented over the years whereby the approved school system is given a 20% to 25% discount, if they take an approved driving course. This same discount that's being offered to the approved system is not being offered to the non-approved. Many people, about 50% of the people in this province, don't go through a driving school.
Ms Lankin: Someone who is a customer of yours or of a member of your organization, which is not part of the approved school, doesn't get the discount. I understand what you're saying: If they've had the same kind of education, training, road safety training, that's not fair. But I'm trying to get at understanding why there's an approved and a non-approved, why your organization membership can't become part of the approved system.
Mr Racktoo: This is within the terms of the association. The association sets its own guidelines and terms. At the present time, a non-approved school is accepted in the system. Last spring, we went to the government and we had it stipulated in the terms and conditions of one organization, which is the Canadian Professional Driver Education Association, that the non-approved schools would become a part of the approved school system. So this is okay. But the problem here is the discrimination this has set up, because if 50% of the public doesn't go to a driving school and they are good drivers on the road, why shouldn't they be given the same credit as the approved school system? This is the point, that they are not being given the same accreditation.
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Mr Douglas B. Ford (Etobicoke-Humber): Mr Racktoo, how many people are in your association? This is a multifaceted question. How many people are in your association, how long have you been in this business, how do you classify your expertise and who sets the standards for insurance standards other than the Department of Transport? I just want to get a general background on you.
Mr Racktoo: This association has been in existence for about approximately two years. Could you repeat a few of your questions?
Mr Ford: How long have you been in this business yourself?
Mr Racktoo: I've been personally in this business for over 20 years.
Mr Ford: How many people do you have in the business?
Mr Racktoo: Approximately 100 and it's growing. We've been two years. It has been established --
Mr Ford: This is in the two years?
Mr Racktoo: In the two years. It started with 11 founding members and it has risen to approximately 100 members.
Mr Ford: How do you classify your expertise in this business, and who sets the standards in your business?
Mr Racktoo: The larger organization attempts to set the standard in this business.
Mr Ford: The driving school?
Mr Racktoo: The driving school association.
Mr Ford: Where do they set their standards from? The Department of Transport?
Mr Racktoo: They set their standard in combination with the insurance company, with the Department of Transport and feedback from within the members of the association.
The Chair: I thank the Independent Driver Educators Association for their presentation to us today.
KINGSWAY GENERAL INSURANCE CO
The Chair: Our next witness is the Kingsway General Insurance Co, Mr William Star, president. Thank you very much for joining us today, sir.
Mr William Star: Thank you. I appreciate the opportunity of speaking to the committee. I'd firstly like to say that the changes recommended by Rob Sampson and his staff are a step in the right direction. Although there are improvements that can be made, the changes proposed should help to keep down the cost of automobile insurance.
Actually, along those lines, I was rather disappointed with some of the remarks I've been hearing about the proposed costs by some people, saying if you don't have the changes it's going to cost so much more, 15%, 20% more per year, and even with these changes, some are talking about 7% and 8%. Quite frankly, I'm not really sure whether these people who are making these remarks have the information and all the details they should have.
I was a member of the Ontario Task Force on Insurance in 1986 and we wrote this nice little report. One of the interesting things is that Dr Slater, who chaired that committee, was an economist and not familiar with the insurance industry at the time but certainly learned very quickly, as Rob has. But one of his comments was the inadequate industry databases and how necessary they were. He was rather shocked at an industry as old and the size of the insurance industry was not really keeping all the information they should and using the information. Fortunately, since then, there has been improvement.
The reason I bring it up is that a year ago, January 1, 1995, the industry was asked to start coding individual accident benefit claims separately. In this information that is being collected in a database by the Insurance Bureau of Canada, there's a great deal of information breaking down the person's occupation, whether they're unemployed, employed, self-employed, deemed employed. It gives the gross income, the type of injury, the length of time the person has been off.
Frankly, I haven't seen any statistics produced like that; I don't think you as a committee, and possibly Rob Sampson also, have been receiving this information from the insurance industry to give you more of an idea of how much it's going to help to cut the benefits down from $1,000 a week to $400 a week.
What effect is this going to have on rates? Is the person who is unemployed the one who's really causing the problems? Are they getting most of the money out of this system? Is that what's costing the higher premiums that everyone has to pay? Obviously everybody's unhappy with these higher premiums. The higher premiums don't help the insurance industry because we pay it out in losses.
I will say, from the indications I've had so far, 1995 has been a better year for the insurance industry. I think part of the increases we have been seeing has been sort of a catch-up because of the various changes we've seen under Bill 68 and Bill 164. I think we've almost reached a plateau, where I don't think you're going to see the substantial rate increases in the future that you've seen in the past, particularly with the help that the changes that are being recommended here will give us with respect to fraud and being able to cut down on that. There has been a great deal of work on fraud, during the past year particularly, and I think that's what has helped bring down claims.
One thing I would like to point out, in the brief that I've handed out, the very last three pages have some charts and these charts were made up from statistics that were produced by the Insurance Bureau of Canada.
The first of these charts in appendix A is the accident benefit claims and adjustment expenses incurred. If you look at that chart, you'll see in the first six-month period of 1990, before OMPP, accident benefit claims amounted to less than $200 million. By the last half year of 1994, we were over $1 billion in payments, a very substantial increase. You're talking about over $2 billion in a year and it's very important for this committee to understand where that $2 billion is going, what sort of categories of injuries are being affected by that and the length of the time and whether they're employed or unemployed people.
The second chart shows the average claim, and again in the first six months of 1990 we're talking about an average claim of less than $5,000. By 1994, we're looking at an average claim of over $25,000, a very substantial increase. Obviously, if you have those sorts of increases in claims, you're going to have a corresponding increase in premiums. It follows. The only way to cut down premiums, of course, is to cut down the benefits. You have to look after the needy, but you don't have to look after the greedy.
I feel that in the insurance industry we have been experiencing a great many problems with the greedy looking for every benefit they can find, not only from the claimants but from many health providers and so on. You can even look at some of the lawyers, the way they've cashed in on the system. In our area in Mississauga the Yellow Pages of the phone book have over 30 pages of lawyers advertising for claims. We didn't have that in the past, so obviously it has become a very profitable field.
You talk about the tort system feeding the lawyers and many people complain about that. I can tell you, the lawyers are getting more money under the no-fault system representing the people than they ever did under tort, and the nice thing is they grab the 20% right off the top of that cheque when the person gets it. They get the money now, not two or three years later, when it gets to trial. So tort is not the problem. The suggestions here of returning to a partial tort system, particularly for economic loss, are very important. I'm personally in favour of that and I've always spoken out in favour of it.
The last chart I'll point out is the cost of earned premiums per vehicle; in other words, the actual amount of premium required to pay for losses. Again, if you look at the first six months of 1990, the premium that was required just to pay accident benefit losses was $73 per vehicle. By the time we got to the last six months of 1994, we're up to $442 a vehicle. That's where the increase in premium lies at the moment. Without a correction in that and without the reduction of benefits and without the elimination or reduction of fraud, we're going to see that increased. I believe the proposed changes have gone a long way towards reducing that.
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In October 1991 I delivered a brief to the Ontario Auto Insurance Review, which was chaired by Blair Tully at the time and, as a matter of interest, I recommended tort recovery for the purpose of monetary loss. Unfortunately, Bill 164 removed the right to sue for all out-of-pocket. The proposed changes now address this issue.
We also recommended at that time the formation of a Facility pool to reduce the premium costs for better drivers within the residual market. We also suggested a form of "take all comers rule" to guarantee that everyone can buy insurance in the province of Ontario. Both those changes were made in January 1994; however, a point system was introduced to control the distribution of applicants. The point system has not worked, and we have suggested on many occasions that point system be removed.
John Kruger, for example, speaks of the senior drivers and how, after one or two accidents, suddenly they're thrown into the Facility and how costly it has become. The whole idea of the pool that was put into place was to allow an insurance company to take a person that may have been insured with them for 20 or 30 years but has unfortunately had one or two accidents and simply place them in this pool, but leave them at the standard rate level rather than throwing them into the Facility where the rates are two and three times as high. The unfortunate thing is, because of this point system, if the person exceeded a certain number of points under the system, the company couldn't transfer them to the pool. They had to throw them out, then they had to apply for coverage through the Facility, and that is one of the problems.
There aren't that many people involved in relation to the drivers as a whole in Ontario, but for every person who is being inconvenienced like that and every senior driver, for example, who has been put in a position where they can no longer afford to drive because their premium has gone from $800 to $3,000, I'm very sympathetic towards them. The removal of the point system I think would eliminate a lot of those problems, and that's why I specifically mentioned that here.
The other item I have brought up in the past and I would like to see addressed at this time or some time in the future is to form a catastrophe pool for accident benefit claims. We have a very rich benefit here in Ontario and, even under the changes, there will be very rich benefits payable to people. The cost of reinsurance, particularly under the present system, Bill 164, is an unlimited situation.
An insurer doesn't know how much any claim might be in the future; if you have three or four or six people in the vehicle and if they're very seriously injured, each one could cost $4 or $5 million over a period of time. Suddenly we're looking at claims where one accident could cost $20 or $30 million in injuries, and it's very expensive buying reinsurance for that.
If we had a catastrophe pool such as Michigan and other states have, where the industry pools these losses and once it reaches, for example, $250,000 or $500,000, the pool takes over, then the cost of reinsurance would be substantially reduced. I think that would be helpful. I would suggest that alone would reduce premiums by 3% to 5%.
In the interests of time -- I know you are running behind and I don't want to delay -- I've covered a number of points, 10 points. I'll go through them very briefly.
I have found one of the most abused benefits under the no-fault system is the payment to people who were not employed at the time of the accident. You have to remember the principle of insurance is to replace what is lost, not reward people, and rewarding them is what we have been doing in the insurance system. That is what is increasing costs. The proposed legislation is going to control quite a bit of that problem. It's going to deal with many of the unemployed and reduce the benefits in that area, and that is a step in the right direction.
One of the other problems -- and I'm sure you've heard a lot about this -- is rehab and all of these other services. The rehab service and physiotherapy and so on are springing up like fast food centres all over the place. I've never seen so many. I don't know why so many people need them now when they didn't need them five years ago. It's pretty obvious that five years ago the money wasn't available. Now it is available, so suddenly everybody's hurt and needs it.
In British Columbia, for example -- I spoke about fraud and auto insurance in British Columbia this past summer and I met with the people at the Insurance Corp of British Columbia. Out there they schedule benefits so that a rehab centre can't charge $60 and $70 for a treatment as they do here in Ontario. They have a schedule of $15 or $17 or whatever on the treatments and it's very well controlled and that saves money, so you don't see all these centres springing up. You find the more legitimate centres that are there to look after the people, not just to make a quick dollar, and that's very important.
But even in the area of vehicle damage, we run into towing problems. I know in Metro Toronto the licensing commission has been trying to deal with the towing problems because insurers get bills after an accident that will sometimes go up to $400, $500 and $600 for towing and storage; that takes a big chunk of the premium, when the towing charges should be more like $75. But all of these benefits have to be controlled, otherwise premium costs will keep on soaring.
There has been some comment in the proposed changes to control the authority of the medical practitioner for the insured, and I think that's very positive where there is a limit on the number of treatments they can have and, following that, they have to get the approval of the insurer or at least work with the insurer. That is important not only from the standpoint of saving money, but also to make sure the insurer is involved to see that people are getting the right treatment. I think, in many cases, they are not. They get in the hands of a service that is simply there for the money and they don't really care whether the person's ever cured or not. I think the involvement of the insurer is important.
Long-term disability concerns me a little in that we seem to be at the point where we're looking after everybody. Should we be looking after everyone? Should there not be some responsibility put on people? That was the nice thing about the tort system. People had to be responsible for their actions. If they were not responsible and they were careless and they ran into a tree because they were drinking or whatever, they didn't receive any money. Under a no-fault system everyone receives money. We're all at fault. We all have to pay. At least with the tort system you can control that. On the long-term disability I think there should be more involvement of tort rather than simply handing out money to everyone.
Payments for psychological benefits again seems to be a growing field. I don't have an answer for it because the brain injury association and all these groups seem to feel that everything should be paid for and they seem to find any little fault that a person's had, even if it's an existing problem for the last 20 years, but now they've had an accident, so great, this person couldn't work for the last 20 years and you'd better start paying him now. That costs a lot of money, and I can assure you this type of claim is going to be the big claim of the future, psychological injuries. That is something that should be dealt with a little bit more at this time.
I've also commented here on suspending payments until the DAC report is received. At present companies are required to reinstate benefits and that's a problem because the natural thing for a person who has been cut off benefits to do is say, "I want to go to a DAC centre," and we are required to start making payments to them. It might take another six or eight weeks and, in the meantime, they receive the benefits. Also, the cost of the DAC is often $1,000 to $2,000. This again adds substantially to the costs.
Optional benefits have been recommended. Frankly, I don't like optional benefits. They create a problem for the insurance brokers particularly. They have to recommend the coverages. Many people won't buy them at the time they're buying the policy, but then after the accident they go to the broker and say, "Why didn't you give me that coverage?" It can end up with a lot of lawsuits and it can be a serious problem.
The other thing is optional benefits apply to that specific person who has bought the benefits; they don't cover everybody in the car. So you have just individuals who might have these optional benefits and we'll give them more money. It is my preference to see that people who require a larger amount of benefit buy it on an overall basis, buy it from an accident and sickness company where it will cover all types of accidents, not just auto accidents. I think that is a much better situation.
The removal of the rate approval system, I think, is very positive, some of the changes made there, because I think that the more you can increase competition the lower the prices will go. With the present rate approval system, it takes so long to get the rates approved and you have to project so far ahead, often 18 months ahead. You're charging more money than you need today, and I think that a file-and-use system will be very effective.
I commented on the point system in Facility earlier, and that should be looked at very seriously as well as the catastrophe pool. At the next Facility meeting that's coming in May, I'm going to bring this up again. I think they're very important issues. Thank you.
The Chair: Mr Star, thank you very much for your very complete report. We have used up our 20 minutes, and I wouldn't want to get between the committee and lunch. We do appreciate your presentation to us. It's been very helpful in our deliberations. Thank you very much for appearing today.
The committee has been provided with travel arrangements and tickets for next week, and I bring this to your attention. It is in the folders that have been presented to you, so you won't be phoning Sunday afternoon wondering where they are. It includes an itinerary and a schedule of witnesses to appear before us as well. There is also a motion that Mr Crozier would like to bring before the committee.
Mr Crozier: Mr Chair, I would present this motion and then you can instruct us perhaps as to how and when you would like to deal with it. What it says is:
Whereas the standing committee on finance and economic affairs (the committee) will hold two weeks of public hearings on the draft legislation on auto insurance; and
Whereas the hearings will receive a wide variety of opinions on the draft legislation;
Therefore be it resolved that:
1. Legislative research prepare a draft report on the submissions before the committee.
2. Such report will be submitted to the committee at the conclusion of the hearings.
3. The committee shall meet for one full day to consider such report and amend it as necessary.
4. Such report shall thereafter be forwarded to the Minister of Finance for his consideration.
If I could just have a comment, I believe when we were receiving the briefing from the Finance staff, at that meeting we briefly discussed how this committee might come to a conclusion on this. Initially I think it was suggested we'll just gather up all the information and it'll be sent off to the minister for his consideration. But I really feel, after two weeks of listening to presentations, that this committee should spend some time to consider a report, make recommendations on the draft legislation, and then perhaps when the legislation itself comes forward it may be in a more complete form.
Mrs Marland: I wonder if we can deal with this motion later in the day. If we don't have a cancellation -- we probably will have, but if we don't -- could we deal with it at the end of the day, because it's 10 after 12 and I think most of us have luncheon meetings.
Mr Crozier: I may not be here at the end of the day. That's the problem.
Mrs Marland: I need to discuss this, so I can't take any action on it right now anyway. If we could come back to it is what I'm suggesting, in that you've just tabled it now.
Mr Sampson: If I may, and I apologize to my other committee members, but I did have a discussion with Mr Crozier on this. He and I have had an ongoing discussion for the last couple of days as to how we might accommodate a more effective report from this committee to the minister. I am prepared to support the theme of this. I think we need to work out some of the technical issues as to how our poor research officer compiles a recommendation when after three days we've kind of been grappling with just the scope of the recommendation, let alone what a recommendation might be.
With respect to my committee members, I would like to perhaps table this one. I'm sorry, Mr Crozier, if I have to do that to you. We are in agreement with the theme, but I think we need to work out the technical issues as to how we deal with this one, given the short time we've got. I also want to make sure that we're not in violation of the direction from the minister and the House that has us here to begin with. I don't think we are, but I just want to make sure of that. We have to require that the Chair would look into that point.
Mr Crozier: Perhaps the Chair should ask this, but you're moving that we table it till the end of the day?
Mr Sampson: I'll table to whenever is convenient. Perhaps we can even slip it in between presentations. I don't think it's going to require a lot of discussion, to be quite honest.
Mr Crozier: We'll leave that to the Chair's discretion.
The Chair: We'll table it to the first opportunity. Thank you very much. The committee stands in recess until 1:20. I'd ask you all to be prompt.
The committee recessed from 1215 to 1325.
MARC MENARD AND ASSOCIATES / ABILITY MANAGEMENT CONSULTANTS
The Chair: We're pleased to hear from Marc Menard and Associates/Ability Management Consultants at this time. Welcome to the committee.
Mr Crozier: Mr Chair, just a point: What's the OFL thing?
The Chair: There was a written submission from the Ontario Federation of Labour which was distributed to you, I believe, just prior to reconvening.
Mr Crozier: Okay, thank you.
The Chair: Mr Menard, please proceed.
Mr Marc Menard: Perhaps I should begin by explaining a little bit about my background and that will help shed some light on why I'm here today presenting before the committee. I'm a self-employed consultant to insurance companies who has specialized in the last few in economic loss determinations.
When the draft legislation came through, I thought it would be important to come and speak to you about some of the findings and some of the research I have been doing in relation to economic loss. I originally started in economic loss with the WCB when I was manager of research and analysis at the time when they implemented the economic loss provisions of Bill 162. Then when Bill 164 came along, people asked me if I would join the private sector and help them out in that regard.
The paper you have before you represents a study of claims that we have reviewed in my company over the past two years. They are Bill 164 claims. They come from all regions of the province. They come from seven companies throughout Ontario. They also are fairly representative of the types of injuries you get with motor vehicle accidents. They also come from different economic backgrounds; they also come from different employment backgrounds.
What I found in my analysis, in my study there -- it's a preliminary study, as you can tell. There is much to digest in there. I had approximately 250 claims to input. Unfortunately, I was only able to input 150 because of the short notice in getting ready for today. I found that the size of the awards are relatively low if you compare them to what the worker's compensation has in terms of awards. Most will be in the neighbourhood of zero to $200 per claimant, per week, which is a net benefit.
Some of the other things I found is that there is a definite link between the nature of the work a person does and the likelihood they will get an economic loss award. There's also a relationship to the seriousness of the injuries and the awards an individual gets under this system.
I'm not aware of any other study that's been conducted of this nature. There may be some. I have no idea. What I did was I took files, claims that were one year and beyond the date of accident or the date of onset of disability and examined them to see if there was a pattern and to see who was getting the awards, how big were the awards, and those types of issues. There had been a lot of criticism when Bill 164 came out that said that we couldn't we afford this, that this might not be fair, that it might lead to undue complications and expenses in the insurance system, so I wanted to see if that was the case.
I did find that there was a correlation to the nature of the work. I broke it down into four different categories, whether the work was heavy, medium, light or sedentary, and what I found was that most of the people who were working in heavy-type occupations and were still injured one year after the accident will probably receive an economic loss award.
Surprisingly too, there were some serious injuries, for instance, even quadriplegics and paraplegics that sometimes do not get an award in this system. That's because they've managed to retain a measure of transferable skills and a measure of ability to earn a living after their accident. In some cases there are some people who may have sustained serious injuries but would not get an award in this system.
Those who were not working at the time of the accident has been another complaint of Bill 164, that it will compensate people who are not necessarily working and provide them with an economic loss award. They tend not to get awards in the present system as it exists. My concern here is that if we introduce the right to sue in this present process, what happens is it adds another tier of intervention. There's already a process in place. It tends to be more objective than not in assessing whether or not an individual has suffered an economic loss, and throwing in the third party, the lawyer in some of these cases, tends to create a lot of acrimony and resistance on the part of the claimants to receiving rehabilitation services.
One of the factors I thought was really important under Bill 164 is that, with the economic loss provisions, it forced the insurance companies to provide rehabilitation to individuals. The cost of the claims initially is very expensive -- that's what most insurance companies will tell you, that the cost of the claims right now under this present system in the front end are very expensive -- but long term they're closing the claims off a lot faster. As a matter of fact, in most cases they close them off at the two-year point instead of waiting three years under the previous system, the OMPP.
The other thing is that if you compare what the WCB has to pay in terms of economic loss awards and what the awards will be like in the present system, it's still kind of early because we're just at two years now. We're just starting to see some of the written offers. But the WCB has the experience of paying economic loss awards to 3.5% of all its lost-time claimants, people who have stayed away from work. Under this system, even one year beyond the accident, only 10% of the claimants will actually receive a written offer with an award. That's far less. I haven't been able to translate that because I don't have the statistics for the entire province, but that, to me, translates to far less than 3.5% of perhaps 400,000 claims.
It led me to question, as I was doing this study, why the elimination of the economic loss provisions under Bill 164 would be necessary with these new statutes. I don't see the wisdom of it. The economic loss under Bill 164 is again not as costly. It's costly up front, it forces the insurer to provide rehabilitation, but at the same time it forces the insured person to also cooperate and comply with the rehabilitation program that is made available to them. If they don't, they suffer the consequences. Likewise, if the insurance company doesn't provide rehabilitation, it too suffers the consequences.
What I have found is that those companies that do practise good claims management strategies and make rehab available to their claimants tend to be in better operating order. In the case of one company I'm working with, they've been able to reduce their weekly claims benefits by 30% just by reviewing their files and looking and strategizing and figuring out, "How do we help this person, how do we get them to the point where we've mitigated the loss in their claim?" and in that way were able to reduce the cost to the system.
It would be a shame for me to see the incentive to provide rehab to people eliminated, because I think it's been a driving force. I know that when they implemented it at the WCB, the reason they implemented it at that time, when I was working there, was that they wanted to force the Workers' Compensation Board and the adjudicators and the case workers to make rehab available to people, and it works in that regard. At the same time, if you build in the provisions to force people to be compliant with the rehabilitation programs, that works as well.
Anyway, that's pretty well the long and the short of it. I think you'll see that the study itself, if you look at it, begins to explain some of the elements and the patterns that I've seen arise.
Ms Lankin: I find your work very interesting in some of the conclusions that you draw. We heard from an insurance industry representative this morning who actually said that he also thought things were starting to settle down under Bill 164, and while he still felt that it was important to take the steps the government was suggesting with respect to tighter caps and reintroduction of tort -- that's another issue -- he believed there was a learning curve companies have gone through, through the issue of claims management and particularly on the rehab side, although he was critical of the proliferation of rehab clinics that are out there.
We've heard from a number of people that pre-1990, under the old tort system, in fact there wasn't a heck of a lot of rehab going on and many of those people ended up in the public system. They may have had and been successful on tort claim or not, we don't know, but still the cost of this was picked up in medical rehab services in the public system and/or through income supplement if a person couldn't return to work. So it makes sense to me that under Bill 164 we would have this sort of bulge of experience with rehab right up front.
I'm taking from your argument that there's a real possibility that a couple of years out we would see a payback to the insurance industry with respect to lower economic loss awards and income supplements.
Mr Menard: As a matter of fact, now they're not going to be paying all that much either. I have a chart in there which shows the size of the pre-accident earnings these individuals had on a weekly basis and you see the size of the awards now; it's quite small, relatively speaking. Only a few individuals come anywhere near the $1,000 limit. When I say "few," there's one in 150 there.
The other thing, as you mentioned, is the disruption. I've lived through several of these disruptions, both as a public servant and also in helping these companies cope with new legislative changes. In the insurance system they will have four separate tiers. They still have some old tort claims they're living with right now. When you introduce yet another changeover on top of that, I think that adds a tremendous amount of costs.
Ms Lankin: I think we would freely admit that there is room within the world of Bill 164 to move in and have better case management profiles, more mechanisms available around treatment plans and to tighten that up, and there was a task force set up to do work in that area. I just suspect that if we had a bit more time under Bill 164, we would understand better the elements of medical rehab and their importance in the long-term prognosis of injured workers.
Mr Menard: Just to carry on with that, I've added to my submission an article that I wrote about the demedicalization of rehab and how you have to focus in on the vocational rehabilitation in this system to make it work, and if you don't -- that's a big mistake that the companies make. They focus constantly on the medical issues and they forget these individuals still have transferable skills, still have a work potential in them and that's where they lose it.
Mr Howard Hampton (Rainy River): If we move off the system that you have set out and that you have, I think, argued a defense for, and we move to the system that is now being advocated, what happens to the victims who would have received some sort of fair treatment, as you argue, under the existing model? What would happen to them under the model that's being proposed?
Mr Menard: I think it loses its objectivity. Right now, you have criteria for what constitutes a suitable job for the purposes of your written offer, for saying, "You could do this job; now you can only do this job," and you follow the criteria. Now it's in the realm -- because there is no definition of what constitutes a suitable job in the new legislation, in the draft, as far as I know, you lose a certain measure of objectivity. The tools you use presently, such as vocational evaluation, functional abilities evaluations, medical examinations, things of that nature, to establish objectively whether or not the person has lost ability and then earning capacity, you don't have any more.
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The other thing that happens is, when you throw in a third party whose main goal is to litigate rather than rehabilitate, then you throw confusion -- you see, good litigation isn't always good rehabilitation, all right? Some lawyers are quite good. You talk to them and you discuss the issue of what kind of rehabilitation their client should have, and they're quite open to this. They say, "Okay, instead of going for the big award, we should maybe do the right thing and help them get proper rehabilitation." Others, on the other hand, equate good rehab with good dollar value in their settlements.
Mr Sampson: Thank you very much for your detailed presentation. I've seen some data similar to this. Where did you extract your database from?
Mr Menard: From seven companies that I've worked with, and they have claims across Ontario. There are some from Thunder Bay, there are some from Ottawa, Hamilton -- everywhere.
Mr Sampson: So there's no regionality here that you were able to pick out.
Mr Menard: No. I just took the first 150 out of my pile of 225 there and I just input them into the database.
Mr Sampson: I will go through it in detail, but just as I flipped through I found rather interesting pages 6 to 8, and the charts associated with that, and also page 10 as it relates to soft tissue injury, which is normally a classification of injury that I think generally insurance companies will tell you they have some difficulty in dealing with under this current system.
It's interesting to find that that's by far the largest injury category that attracts the loss of earning capacity benefit, which, for the uneducated, is the benefit that's paid two years after the injury to deal with disability continuing thereafter. But counter to that is a tremendous number of studies, one of which was done in our neighbouring province of Quebec that indicates that in soft tissue injuries -- and they have a duration curve that they speak to there -- a large share of them recover within the first two months of injury, let alone two years of injury. I'm wondering whether this isn't telling us something. What do you read between that?
Mr Menard: In reality, though, a lot of the claims do carry on, and you'll find, especially in auto insurance, that it's those individuals who have medium to heavy type of work who tend to stay away from the kinds of -- now, I haven't been able to delve into that. It's just that right now that's what I see from the statistics I have. I haven't commented on that either.
The other thing that happens is that people who are away from work in auto insurance are less likely to return, because there are no provisions to force employers to take them back, as they do with workers' compensation. So the moment they are injured in a car accident, it's a little more difficult to get them back to work. That might explain it.
Mr Sampson: I think you've got to look at the numbers we're talking about here in relation to the light and medium percentage of awards that go under the LAC category; again, 37% and 35%, respectively, for medium- and light-duty work getting LAC awards, but in the heavy-duty category, 18%, a significantly lower number.
Mr Menard: That's just because in my sample fewer people were actually working at heavy work when they got injured. But you'll notice that all of the individuals who were working at heavy work did get an offer and an LAC award. These people were all off one year after the accident, so the likelihood of them returning back to their pre-accident job is significantly diminished. I think it's less than 4% after one year that the person will be returning.
Mr Sampson: Right. I'll be interested as I look through this to get a better understanding as to how we get 49% of soft tissue injuries going into the two-year category to be qualified for a LAC when the studies don't indicate that that's anywhere near the duration at all for an injury like that.
Mr Menard: I know, but they are. That's all I can say. A lot of those are getting settled, though, before they reach the two years.
Mr Crozier: Good afternoon. On page 17, in Conclusions and Recommendations, in the paragraph midway down the page, you said, "To our knowledge, there is no evidence to suggest that the insertion of a litigious process will make economic loss determination any more efficient, fairer or less expensive than it already is at present." Could that be interpreted as, it won't have any effect on premiums one way or the other?
Mr Menard: I think it would have an effect on premiums. Claims adjusters whom I speak to when I work with them say that the moment you begin to insert the courts and the lawyers, it does increase the costs because there's less cooperation on the part of the claimant in the rehab process and also in determining whether or not there's been an economic loss.
If you're going to change this thing, I would say that you should look at providing a definition of what a suitable job is and also a definition of what pre-accident earnings are. How do you determine this? Even if you go to the courts, right now most people agree that how you establish economic loss is the difference between pre-accident earning capacity and residual earning capacity.
Mr Crozier: So by saying it won't make it any less expensive, you're saying in fact it may make it more expensive.
Mr Menard: It probably will, yes.
Mr Crozier: Okay, I appreciate that.
Mr Menard: There's an added expense in there that wasn't there before.
Mr Crozier: Just briefly on claims management, it's been suggested that companies that have a good claims management system are then able to control costs. At the same time, it's been suggested to me that there isn't any incentive for companies to manage claims because if their claims management gets better, they can't then increase premiums.
Mr Menard: Yes. You may have heard that. I haven't heard that. As a matter of fact, the companies that I work with are far more interested -- especially if you're an adjuster and you're carrying a caseload of 200-plus, it's a real headache. You want to close off as many of these claims as possible. You want it manageable. It's an incredibly stressful job, when you get down to it, so they would want to simplify their lives by closing claims off.
Mr Crozier: So you would suggest that most companies would try --
Mr Menard: Want to practise good adjudication, and good adjudication and good rehabilitation are not mutually exclusive.
The Chair: Thank you very much, Mr Menard. We appreciate your presentation to the committee today.
PETER KORMOS
The Chair: We now welcome Mr Kormos to the committee.
Interjection: Who?
The Chair: The Honourable Mr Kormos, MPP, Welland-Thorold.
Mrs Marland: I don't know about "Honourable."
The Chair: Mr Kormos, we have 20 minutes together.
Mr Peter Kormos (Welland-Thorold):aj said to put in his riding even though he is appearing as a deputant,js Thank you, Chair, and thank you to the committee for letting me engage in this somewhat novel exercise. I was motivated by any number of things. One, I know there are some people on the committee who have never heard me talk about auto insurance; there are others who have, to their regret, I'm sure. But as well, and although you've made reference to my position here in the Legislature, I believe very strongly that it's important to bring some observations to this committee and put them on the record, hopefully for the committee's consideration and certainly for the government's consideration, that might not be specifically brought forward.
Were Mel Swart available, obviously my predecessor in Welland-Thorold and an advocate, as all of you know, as a New Democrat for public auto insurance, I'm sure he would have been making these comments to you. Just as he addressed the committee that discussed Bill 164 during the course of the last government -- and he did so on behalf of advocates of public auto insurance and a large number of New Democrats who fervently hope for the establishment of a public auto insurance system -- I come to this committee today, I believe, speaking in the same vein.
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One of the observations that is particularly worthy of making is the unfortunate competition that seems to have developed between the concepts of tort and no-fault. If I can put this in something of a historical perspective, understand that there was a time not too long ago in this jurisdiction when automobile insurance was on the basis of pure tort. In fact, it was New Democrats and it was people like Mel Swart who advocated for no-fault, to the point where no-fault, in a peculiar sort of way, became identified with New Democrats. It was New Democrats, people like Mel Swart and others who were concerned about the plight of all accident victims, who recognized that there had to be something more than merely tort. There had to be some relief for the person who was injured for whom there was not a tortfeasor, be it the single-vehicle accident or the person marginally at fault or the person even perceived as being at fault. Obviously, a blended tort/no-fault system, tort undoubtedly taking the upper hand, was the system that pre-existed Bill 68, which was the auto insurance reforms of the Liberal government of 1987 through to 1990.
Actually, I'll note this: I have been blessed with a long enough tenure here, albeit brief in the total scheme of things, to have witnessed the minefield that auto insurance creates for premiers of all political stripes. It certainly did for the Liberal government of 1987 to 1990; it did, and I don't think there's any secret about it, for the New Democratic Party government of 1990-95; and I suspect there are still a large number of mines waiting to be detected in that field by the government of the day.
I would commend to those people on the committee of any caucus reading some very important, seminal investigations into auto insurance: of course, the Slater report modestly, but most importantly the Osborne report, which made some significant observations other than its criticism of public auto insurance. Both of those, as well as the Kruger report of the Ontario Automobile Insurance Board, made it quite clear, as have other commentators, that if no-fault is being pursued as a means of addressing premium costs, then forget it, because no-fault in itself does not reduce premiums.
That's why I say it's unfortunate about this debate, this competition, that there's almost a sense of mutual exclusivity about tort and no-fault. No-fault has become identified with the pursuit of lower premium costs, when that's not the case. It's my view, and I think the view of participants in those Osborne and then Kruger OAIB hearings, that if you're going to look at no-fault, understand why you're looking at it. You're not looking at it for cost reduction; one should, I submit, be motivated by generating some enhanced fairness for others than innocent victims for whom there is a tortfeasor, but recognize at the end of the day that, in itself, it's not going to generate savings. I think that's a truism. I think that's a given.
At the same time, much has been made and much has been spoken of and will be, I'm sure -- and granted that I often share the somewhat Shakespearean view of lawyers that most of the public has -- about the role of litigation and the cost of legal fees. But remember this, and I don't think this has been addressed to any great extent to this point, before this committee: The no-fault provisions in both Bill 68 and, more so, Bill 164 -- because Bill 164, other than the modest pain and suffering, is more of a pure no-fault system, although not a meat-chart system like Quebec. I want to talk about that in a few minutes. No-fault systems are not without litigation costs, and indeed significant litigation costs. Insurers traditionally, before the Ontario Insurance Commission, are using legal counsel to defend applications for mediation and/or arbitration. We have not heard of the legal costs involved, which are ultimately paid by the premium-payer, in the litigation surrounding no-faults.
One of the sad realities of the no-fault systems that were developed in Bill 68 and then Bill 164 is that there isn't as available a regime for payment for plaintiffs' lawyers as there was under the pre-Bill 68 mechanism when the primary focus was on tort. What that means, in my experience, in terms of the incredible number of contacts that have been made with me and certainly in my community through my office, is that a great number of claimants are frustrated in their attempts to attain no-fault benefits by the unavailability of advocates or legal practitioners to act on their behalf to collect data, to collect material and to organize a case.
This is the third attempt, as I've indicated, to revise or restructure auto insurance in the province. Again, I'm concerned because I've been a witness to the manner in which the auto insurance reforms erupted, as they did, I believe, in the Peterson government, in the Rae government and now in this government. Of course, some of us made much ado about the fact that during the course of the election campaign of 1987, under pressure in a scrum, the campaigning Premier of the day said that he had a very specific plan with respect to auto insurance. Again, it's perfectly obvious he sent John Kruger out at great expense to find out what that plan was that he proclaimed himself to have. At the end of the day, we witnessed once again not a drop in premiums but an escalation of premiums. Once again, the last government -- and there's no telling stories out of school in this regard -- campaigned, and I certainly did and I think every member of that party campaigned, on the proposition of public auto insurance. That government felt compelled, in its particular case, for reasons that it has articulated -- not all of which I agree with; there's no two ways about that -- to make a decision not to pursue public auto insurance but rather pursued the course that was finally revealed in the nature of Bill 164.
Bill 164, once again, did not control premiums. There's simply no two ways about it. I suspect, to give credit to the minister who was responsible, notwithstanding his initial comment that premium increases would be achieved at a maximum of around 4%, that those were made in good faith. At the same time, the Insurance Bureau of Canada, during the hearings on Bill 164, predicted premium increases of 19%. At the end of the day, they ended up being far more accurate than were the estimates of the ministry and of the government.
Once again we have, in my view, insurance so-called reform being driven here not so much by a real understanding of the solution, but more so by -- as in the case of the last government and indeed the government before it -- a compelling need to fulfil a perhaps hastily made commitment during the course of writing electioneering strategy. Of course I'm referring, in the case of this government, to the commitments made during the course of their campaign and in particular documented in the blue book, the so-called Common Sense Revolution, and that was a restoration of tort and a control on insurance premiums. Indeed, at various points in time, there were promises made of reductions in premiums. When we listen to IBC -- and this is where there should be some great concern on the part of the committee and all of the province, because when we listen to the IBC, the Insurance Bureau of Canada, talk about Bill -- it's unnumbered as yet; I'll call it the new bill -- but the new bill generating yet more and regular increased premiums, the contradiction of the IBC by Zurich Insurance and its spokespeople, the second-largest insurer in the province -- and I say this to you: Either there is some outright chicanery going on, there's some flim-flamming, some bamboozling going on in terms of a Mutt-and-Jeff routine between the IBC and Zurich Insurance, or Zurich Insurance has to be given some credibility, because as the second-largest insurer in the province, they're certainly in a position -- I'm talking about auto insurance -- to have a far better handle on the costing of a given scheme, in view of the number of insureds that they have and the experience that they have.
What's troublesome is that there is no actuarial costing of the components of this particular package, and I'm talking about the fact that -- and parliamentary assistants, you know that the approach to this sort of thing in the planning process is something of a modular or a block approach. Granted, there are sometimes interactions that generate lesser or greater impacts, but by and large you're talking about components. You're talking about X% of the premium dollar being to pay for this element of benefits, X% being used to pay for this element of benefits. That hasn't been revealed here, and the fact is that at the end of the day the government and the committee members, and in particular the government committee members, are going to be called upon to start dissecting and piecing this thing back together, shaving points off here and there, when in fact there's no familiarity with what those points are.
This is, in my view, an incredibly haphazard way to develop an insurance system, especially when now -- and I was critical of Bill 164. One of the reasons I was critical of Bill 164 was that it created yet a new regime here in the province of Ontario, with a new class of victims, at that point there being pre-68 victims -- and there are still pre-68 victims. You've heard about them here at this committee because they're involved in litigation that hasn't yet been resolved. There are Bill 68 claimants, there are Bill 164 claimants and now there are going to be new bill claimants as well, regardless of the form that this new bill takes.
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To have embarked, in my view, on Bill 164 -- and I've got to tell you, there are some people in that government caucus who now feel free to express this view to me as well -- was something of an error in that it didn't allow Bill 68 to mature and didn't in effect provide amendments or an appropriate response to Bill 68 that might have provided a better system, but without creating an entirely new class of victims.
Obviously, I'm leading to the proposition of public auto insurance, and I'm going to tell you, Chair, that I am as adamant as I ever was that a public auto -- how much more time do I have left, Chair, please?
The Chair: You have five minutes.
Mr Kormos: I'm as adamant as I ever was that a public auto insurance system indeed is the route that this government, indeed this government notwithstanding its philosophy, ought to consider if it truly is going to pursue justice for drivers and for victims.
Look, we've got three western provinces and of course Quebec with public auto insurance systems, none of which have been dismantled by either Socreds or Liberals or Tories when they held power in those respective provinces, notwithstanding that it was CCF and New Democrats who brought the systems in. Granted, in Saskatchewan they've modified the tort rights so that tort rights are restricted to excess economic loss in excess of no-fault benefits. In Manitoba, they've adopted a Quebec-style meat chart system. In British Columbia, we still have a full tort system with significant no-fault benefits -- granted, not as high as those that had existed in Ontario, but darned close to the ones being proposed in this bill, yet with premiums that remain significantly less than in the province of Ontario.
The average premium in 1996 of $902, in contrast -- one of the problems with this exercise is nobody's giving us the straight goods here. Everybody's hiding their light under a bushel and playing their cards close to their chests. We can't get numbers out of the industry. I've got a feeling the industry itself doesn't know the numbers and the fact that they're in such disagreement and internal fractionalism regarding this -- compare that to at least the number of $1,114 for the average insurance premium in 1996, which is the lowest average. It could be as much as $1,300.
So we've got significantly lower premiums still in British Columbia, notwithstanding that there's a full tort system, healthy no-faults and indeed a driving population that is very similar to ours. Some 2.2 million cars -- and much has been made of that, the fact that 2.2 million vehicles can't be compared to six million, but I tell you this: The reality is that with six million vehicles, six million drivers in the province of Ontario, we have yet a larger risk pool and insurance, although some people here can make it very complex, in some respects is very simple. That is, the larger the risk pool, the greater the sharing of risk and the greater efficiencies and economies for the given driver.
The exercise of public auto insurance in Ontario is six million cars and six million drivers, with the opportunity to track not only vehicle owners' histories, but drivers' histories, that is to say, licensed people who aren't necessarily vehicle owners. It's a very important function and something that happens in British Columbia. That is to say that licensed people pay premiums as well, because the mere fact that you don't own a car doesn't mean that you're not on the road creating a risk, and in fact British Columbia has been eminently successful at generating a bonus-malus system where good drivers pay less, seniors receive an automatic discount, bad drivers pay more and indeed bad drivers in many instances in British Columbia are literally forced off the roads, as they should be, because they shouldn't be even in a Facility Association; they simply shouldn't be driving.
British Columbia has been eminently and outstandingly successful at doing risk management. British Columbia has generated millions of dollars each year in its premium assessment to provide for highway safety programs that come directly out of the insurance system, not out of general revenues, indeed going so far as to getting involved in partnerships with municipalities where, for instance, dangerous stretches of roadway -- and there are a few here in the province of Ontario that the Minister of Transportation should be addressing for life and health's sake. The fact is that in British Columbia, unsafe stretches of roadway have been rebuilt, re-engineered, redesigned, repaired, lit, as the case may be, in partnership with municipalities and the Insurance Corp of British Columbia. It's in this way that they've managed to control premiums and maintain high levels of benefits in a way that the private sector here, with its 100-plus providers, simply cannot do.
There have been occasions in the history of the public auto insurance system in British Columbia where there had to have been significant catch-up. The fact is that over the course of the last nine years, there's been almost a 300% increase in the amount of claims paid out for bodily injury, and similarly, almost 300% on the amount paid out for tin and glass for motor vehicle damage, yet the amount of bodily injury has increased in proportion to the tin and glass. There's been some significant savings in the amount of payments being paid out in tin and glass.
I'll tell you that last year there was a 1.75% premium increase in the province of British Columbia; the year before that, 3.2%. Granted, the year before that, there was a significant increase. Some might attribute it to the fact that the New Democrats had not been re-elected yet and that it was a right-wing government running the plan, but I'll not engage in that sort of partisanship. They experienced the same sort of difficulties in terms of having to reassess where claims were coming from, to track records, to track claims and address that with premium increases.
At the same time, as you well know, the Insurance Corp of British Columbia has a rate stabilization fund. Basically, it's a reserve to control for blips on a year-to-year basis, anything from the incident of a major snowstorm which might involve a number of fender benders to other peculiarities, and this rate stabilization fund is a significant part of the system, which helps control and maintain stable rates in the province of British Columbia. It also pays a significant tax, to the tune of 4%, to the general revenues. It, as I said, involves itself in highway safety and in addressing unsafe road conditions and unsafe circumstances in a way that the private sector industry simply can't do.
I tell you -- and I'm terminating -- I find myself, again peculiar, in agreement with the Toronto Sun editorial of yesterday. The Toronto Sun suggests that you, Mr Sampson, and the Conservatives should go back to the drawing board. You have been generous enough to make very favourable references about public auto insurance, indicating that if this doesn't work, then public auto insurance might be the only alternative. I tell you, my friend, this is not going to work. Public auto insurance is the alternative. I think I speak for all New Democrats here in the Legislature in saying that we'd be more than pleased to work with this government in creating a public auto insurance system for the province of Ontario and indeed finally achieving the goal of fairness for victims and fairness for premium-paying drivers.
Thank you kindly, Chair.
The Chair: Mr Kormos, thank you very much for the presentation and the history. The history was very interesting.
Mr Gilchrist: A point of order, Mr Chair: I'm just a little concerned. I'm not familiar with the NDP constitution, but I just want to make sure we're not violating any of the equal access rules by allowing one leadership candidate here and denying the others.
The Chair: That's not a point of order.
Mr Kormos: You don't know what Ms Lankin and Mr Hampton have in store for you.
Mrs Marland: Mr Chairman, I have a point of order.
The Chair: Here's another point of order that probably isn't. Yes, Ms Marland?
Mrs Marland: I'm using a lot of restraint right now.
My point of order, Mr Chairman, is this: due to the time having expired, we're not going to be able to ask Mr Kormos questions, but I think, however, it's important for Mr Kormos to know there's no reference to automobile insurance in the CSR whatsoever, so your comments were inaccurate.
The Chair: That does not require a response, Mr Kormos. Thank you very much.
Ms Lankin: It was not a point of order, Mr Chair.
The Chair: It was not a point of order either.
Ms Lankin: You ruled on it in advance.
GEOFFREY LLOYD
The Chair: Dr Geoffrey Lloyd has joined us this afternoon. Mr Lloyd is an author of some repute, I believe. Welcome to the committee.
Dr Geoffrey Lloyd: I would perhaps like to introduce myself to the committee. I'm Geoffrey Lloyd. I'm an orthopaedic surgeon. I've practised in Toronto since 1968. I'm also an associate professor of surgery at the University of Toronto.
I appreciate the opportunity of making a presentation to you. It's going to be brief, addressing two issues. I think I'm going to plagiarize something that I heard Mr Kormos say a moment ago, entitled enhanced fairness. The two issues I would like to address are, first, the definition of a health practitioner and second issue I would like to address is the implications of the statement "serious impairment of an important physical, mental or psychological function," this having an important bearing on the ability or otherwise to claim for non-pecuniary loss.
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I make this presentation as an individual. I am not representing any organized constituency. I have made available to the Chair a list of my experience in the areas of medical, legal and disability reporting, which does extend over a considerable period of time. I would also claim to have a profound understanding not only of the methods of treating injury to the musculoskeletal system, but the likely outcome following such injuries, given optimum treatment.
As a consequence of treating, evaluating for medico-legal purposes and being aware of the outcome of litigation and mediation processes, I have concerns that the legislation in its current form achieves all that would be intended by its authors.
The first issue I would like to address is the definition of "health practitioner." Here I'm referring to page 9 of the draft. As I review the definitions of the various health practitioners, there is the statement "authorized by law to treat." It would seem to me that in addition to having the authority to treat, it's also necessary for the various health practitioners to have an understanding of the manner in which the injury would normally recover, not only in terms of time but in terms of completeness. In other words, I think the health practitioner should be required to have an understanding of what we call prognosis for the injury that he or she is treating, and what's more, I think this person should be accountable for this prognosis to his governing body.
There's a body of opinion and literature which in many instances is reliable in terms of providing a prognosis. The authority by law to treat is not synonymous with having this understanding of prognosis, and if the committee wishes, during the course of questioning, I can give you a significant number of examples whereby patients have been considerably disadvantaged by an inappropriate prognosis. I can also give examples of situations where funding agencies have been disadvantaged by an inappropriate diagnosis.
I would have the temerity to suggest that the committee might consider amplifying the responsibility of the health practitioner not only to treat, but to also have an understanding of the prognosis, before allowing the victim to embark on extended treatment or a major lifestyle change.
The second issue I would like to address is the issue of serious impairment of important physical, mental or psychological function. I have concerns that this statement does not take future deterioration into account. In my own discipline and in other disciplines, there are injuries from which the patient initially seems to make a good recovery and does not appear to be left with an impairment of an important physical, mental or psychological function. Unfortunately, many years later -- and this could be measured in decades -- there is a deterioration which, had it been present at the time of the initial adjudication, would have satisfied the definition of "serious impairment of an important physical, mental or psychological function." By the time this deterioration is recognized, under the present arrangements the ability to recover damages has long since past. Again, if the committee wishes, under questioning I can cite specific examples of these scenarios.
For these reasons, then, I think it would be reasonable for the committee to consider modifying this statement to read "serious impairment of an important physical, mental or psychological function, or the probability of developing such an impairment in the future."
I think this change would safeguard the interests of the patients who initially appear to have recovered well but who in reality have suffered the sort of injury which is going to be subject to further deterioration in the long-term future, which would qualify them for damages under the definition of serious impairment.
I appreciate the opportunity of sharing these two ideas with you and I would welcome your questions.
Mrs Marland: Thank you very much for being here, Dr Lloyd, and for your presentation. I'd like to ask you about this subject of accountable prognosis. I appreciate your raising this question. I think it would be a great deal of concern to any of us, as victims of motor vehicle accidents -- which is what we're focusing on in this committee and would apply to any illness or impairment, but this is the subject before this committee -- if we felt that we could have prescribed treatment plans without accountable prognoses.
Everyone who's involved in this along this chain, as we are now learning, is a professional, is responsible, and I would hope through their professional training is also accountable. So how do you see us dealing with this question that you've raised? I think it's a very important question. How is that something we can deal with as a government? If a prognosis wasn't accountable or the person giving the prognosis wasn't accountable, wouldn't that be up -- I'm going to get a message any minute.
Interruption.
The Chair: We apologize for the interruption. There was a gas leak and it's apparently now corrected.
Mrs Marland: I'm wondering what your advice is to us as to how we can secure accountable prognoses on behalf of victims other than our expectation that the professional bodies and colleges for whom the people making the prognoses belong or are under the jurisdiction of. What else could we do?
Dr Lloyd: I think a number of things. First of all, one could ensure that the person making the statement, by virtue of his background, training and education, had received an education that would allow him to make that judgement. As a practising physician I see examples, and I will if it's appropriate cite specific examples, where the person making statements is either not aware of the literature or, alternatively, by virtue of his background training and education, has not received the training. As a physician, for example, it is mandated by the college that I must know prognosis in my area of discipline. I am not sure that is of necessity the case in other disciplines.
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Mr Crozier: Thank you, Dr Lloyd. You're obviously very eminently qualified to give the opinions you have in the areas that you've chosen. I followed your presentation with interest and noted that when you said you would suggest to the committee that they might consider amplifying the responsibility of the health practitioner to provide a reliable and accountable prognosis before the "victim" embarks on extended treatment, it changed from "patient." Was that an intentional change? If so, perhaps you could explain it for me.
Dr Lloyd: It was partially intentional. As a physician I look upon human beings who are sick as patients. However, I think there are patients who become victims because of an inappropriate prognosis.
Mr Crozier: I appreciate that. I thought there was some significance to what you said there. Also, you said that during questioning you could give some specific examples of conditions that would fit the scenario of "serious impairment of an important physical, mental or psychological function." Perhaps you could give us one in your experience, please.
Dr Lloyd: Yes. For example, if you have the misfortune to dislocate your hip, given optimum treatment it is highly probable that you will for the first few years appear to recover very well. However, it is highly probable that over the course of a decade or two you will develop an arthritis of your hip, which will open up the vista of having all the sorts of treatments that are necessary, and it may well have a profound effect on your lifestyle starting 10, 15, 20 years after the accident.
Mr Crozier: That's in my estimation a good example. If I can recall from a previous presenter who was not a medical practitioner, there was the suggestion that arthritis would not result in the future from what you have described here. I'm going to go back and check Hansard to make sure that's what was being referred to, because it appears to be contrary to what the previous presenter said, and I certainly at this point would say that I would respect your opinion much more highly than his.
Mr Hampton: Just so that I'm quite sure of what you mean, on page 4 you refer to the types of injuries that can result in future deterioration. Can you describe, generally, what types of injuries will frequently lead to future deterioration? Is there a class? Are there a couple of classes of injuries where that often happens?
Dr Lloyd: Yes, there are a number of classes; I can give you two classes. For example, if you damage a joint surface to a degree that in spite of the best treatment it is left with some degree of irregularity, then the probabilities are that you're going to get arthritis.
If you have a fracture to your spine which distorts the mechanics of your spine, it is true that you are, over an extended period of time, going to develop arthritis above and below the area of the damage, which again could have profound effects on your ability to function.
These are two examples; there are others. For example, as football players repeatedly do, if they tear their anterior cruciate ligament, in spite of our technology it is probable that this group of patients is going to develop arthritis in 10 to 15 years. It is not uncommon for a motor vehicle accident victim to tear his anterior cruciate.
Mr Hampton: Let me narrow it down a little further. Whiplash injuries happen frequently in automobiles. In previous incarnations on this same committee, talking about previous approaches to auto insurance, I think I've heard whiplash injuries mentioned more often than anything else. Is it frequent that whiplash injuries result in future serious deterioration?
Dr Lloyd: Given the narrow definition of whiplash injury, which is usually synonymous with soft-tissue injury, then there is no fundamental reason why these patients should deteriorate in the long term. One would expect them to recover in a two- to three-month time frame. There is no pathophysiological reason why they should not.
Mr Hampton: Just to go to your second point, you differentiate between the authority by law to treat and having an understanding of prognosis. In law and in terms of medical responsibility, how do you define having an understanding to give a prognosis? What, in medical terminology and/or legal terminology, differentiates these?
Dr Lloyd: I can only speak as a physician. As a physician, I have an obligation to have a knowledge of a prognosis. This is based on experience but principally on literature, on medical literature, and I have an obligation to give a prognosis which conforms to the general consensus of opinions. If I don't do that, then I am accountable to the College of Physicians and Surgeons. I am suggesting that the other disciplines should have that level of accountability, because I am seeing prognoses given which do not correspond with the consensus of medical opinion.
The Chair: Thank you very much, Dr Lloyd. We appreciate your presence here today.
Dr Lloyd: Thank you for your time.
The Chair: There's been a request for a five-minute recess, and perhaps when we come back we could discuss the motion brought forward by Mr Crozier. Since our first presenter this afternoon was not present, we would then be back on time.
The committee recessed from 1428 to 1435.
The Chair: Did you wish to say something about the motion, Mr Sampson?
Mr Sampson: Yes, Mr Chair. As I said when we broke just before lunch, we're prepared to work with this particular motion. There are a couple of changes I think we need to do to deal with the technicalities of what's being proposed. It would seem to me appropriate that the research officer would provide us with the summary of kind of who said what during the committee process, and that should be available to us -- I'm not buttonholing him, but it should be available to us shortly after, I would expect, when we --
Mrs Marland: Friday morning, after we finish at midnight on Thursday?
Mr Sampson: Well, whatever.
Interjection: A week.
Mr Sampson: It requires a week? All right. Then based upon that, it would seem appropriate for the various caucuses to recommend to him what should be in a recommendation note to this committee. It's going to be hard for him to be able to capture what the recommendations should be unless, based upon what we see, who said what to whom type of thing, we know what to grab from that, so to speak, and then that would be the basis upon which he would prepare a draft report that we would review when we came back, reconvene that week the House opens. I'm just trying to work out the logistics of how the research officer gets a handle on recommendations without getting some direction, frankly, from the various sides of the table here. Of course, we can't provide those recommendations until, I think, we've had a full summary of what's been said. So I'm kind of going back a bit here.
It would seem, if I could, Mr Chair, that Mr Crozier's motion might be modified slightly to suggest that we receive this summary of who said what a week after our last day next week, and then each caucus would submit back, I guess through the clerk -- I'm sort of winging it here -- our recommendations as to what we would like to see in the draft report that the committee will prepare. Then we will meet Thursday of the first week back, which I think is the 21st, if my numbers are right, to review that report. Ms Lankin's shaking her head.
Ms Lankin: It's a very difficult time frame. There are members of this committee who are also working on the report that will be coming back from the pre-budget hearings and we'll be spending a couple of days, the same week you would have us reviewing and meeting with caucus and developing recommendations, we'll be dealing with the report writing on the pre-budget.
Mrs Marland: Oh, that's right, the Monday and the Thursday of that week.
Mr Sampson: No, the report from the clerk wouldn't be back till actually the Thursday of that. You'd be over your pre-budget stuff, and then there's a two-week gap, frankly, before we come back for that week, if I remember the calendar correctly.
Ms Lankin: One week.
Mr Sampson: Is it one week?
The Chair: The week of the 11th.
Ms Lankin: I'm just suggesting that's a difficult time frame. The week of the report writing is also the week that all three caucuses will be holding caucus retreats, so it'll be subsequent to that. I'm not sure about caucus schedules, but I don't believe there is a caucus meeting scheduled for that week immediately before the House comes back, and there will be much business the first week.
Mr Sampson: Do you want to roll it a week ahead?
Ms Lankin: That would be helpful in terms of the week that the committee meets. The second week that the House is back would be helpful.
The Chair: The 28th?
Mr Sampson: There are some technical problems in how that backs up the process in dealing with other items. I just want to clarify something. The day that the report from the research officer would be available on who said what would actually be the 7th, which is the Thursday of the week we're all in our various caucus meetings.
Ms Lankin: The Thursday of that week, and then the following --
Mr Sampson: So it's the 7th.
Ms Lankin: Yes.
Mr Sampson: And then we would come back into the House --
Ms Lankin: On the 18th. And the point that I'm making is that week in between is a week where, for example, we do not have a caucus meeting scheduled.
Mr Sampson: Oh, I see.
Ms Lankin: We will have had the two-day retreat on the 4th and the 5th, as will you.
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Mrs Marland: But, Frances, if I can help, it's the 4th and 7th that we are writing as a committee. We are meeting to write the report on the pre-budget. The difficulty, I think, for all of us is the fact that we are dealing with two reports here, one committee writing two reports.
But in fairness, if I can be helpful, Mr Sampson, Andrew is very experienced and I'm sure he's doing his usual excellent job of accumulating the input from the deputations as we are going along day by day. I think we should ask Andrew about how soon after we complete the hearings next Thursday in Ottawa would he be able to present us individually as caucuses with an overall summary of the submissions, because that's the benchpoint from which we start, I think.
Ms Lankin: In fact, for me, while I appreciate you attempting to be helpful, that is not the benchpoint. I think if Andrew can produce it sooner, that's fine. I wouldn't want to put him under a strain to try and get it out earlier, because it doesn't change my basic problem. On March 4 and 5, your caucus is in a caucus retreat, ours is, and I'm not sure about the Liberal --
Mrs Marland: The 5th and 6th.
The Chair: The 4th we're meeting here.
Mrs Marland: Right.
Ms Lankin: Yes, the 5th and the 6th, I'm sorry.
Mrs Marland: Right.
Ms Lankin: So the 4th and the 7th of that week we're doing pre-budget. So whether the document comes down or not, I have no opportunity to review that, to prepare recommendations and to meet with my caucus. It will not be an item imposed on a caucus retreat agenda which has already been set. So it won't be until the first week the House comes back, March 18, that I'd be in a position to deal with it with caucus. So I'd appreciate it if you could look to some time the second week.
Mr Sampson: The 28th would be the next available date. Is that an available date for scheduling, Mr Chair?
The Chair: Yes, it is.
Mr Sampson: Well, maybe that's the date we'll have to stake off.
Mrs Marland: Is it Thursdays that you normally meet?
Mr Sampson: Thursday the 28th is the day we would reconvene to review the draft report and finalize it. We would only have one day to do it, but I suspect we might be able to come to some conclusion then.
Okay, if it worked back from that day, when is it that we would expect to be sending caucus recommendations to the research officer, the week before that? That would be the 21st, and then we get something from the research officer with respect to a summary of events by March 7.
Mrs Marland: I think Andrew should be able to speak.
Mr Sampson: Yes.
Mrs Marland: Is that okay with you?
Mr Andrew McNaught: Yes.
Mrs Marland: So we're talking about having the report on what has taken place coming from you on the 7th, and then the formulation of the input from the three caucuses, we'd get back to you by the 21st, and then Andrew presents to the committee what he has drafted as the report on the 28th.
Mr Sampson: Correct.
The Chair: Is the committee in favour of these arrangements? No one being opposed, thank you.
NORTH YORK REHABILITATION CENTRE
The Chair: We'll now welcome the North York Rehabilitation Centre. Thank you very much for joining us today, gentlemen.
Dr Rocco Guerriero: My name is Dr Rocco Guerriero. I'm the president of the North York Rehabilitation Centre. I'm a licensed chiropractor and associate professor of orthopaedics at the Canadian Memorial Chiropractic College. With me today is my partner, a medical physician, Dr Howard Platnick.
Thank you, Mr Chairman, ladies and gentlemen, for this opportunity today in allowing us to address some of the important issues of auto insurance reform. The purpose of our talk is to give you some insight into the designated assessment process and provide you with our comments and suggestions about the proposed draft accident benefits schedule.
Just to give you some background, the North York Rehabilitation Centre is one of the five medical and rehabilitation designated assessment centres, or DACs, in the Metropolitan Toronto region and one of 28 in Ontario. Since we started doing DAC assessments on January 1, 1994, we have performed a large number of assessments. Recently, we became designated as a residual earning capacity DAC, which seems like we won't have much business in the future.
There are four different types of DACs, and I hope you understand the difference between them; the two main ones are the medical and rehabilitation DACs and the disability DACs. It's important to understand the difference between the two.
The purpose of the DACs is to provide impartial and independent medical and rehabilitation assessments for the Ontario Insurance Commission to facilitate dispute resolution. We primarily evaluate the necessity and reasonableness of the proposed or ongoing medical and rehabilitation services and/or other goods and services. We adhere to conflict-of-interest guidelines provided by the OIC. Each assessment is assigned various health care experts who can best answer the question being asked by the insurer. So if there's a question on social work, for example, we'll have a social worker and/or psychologist as part of the assessment team evaluating that particular benefit.
I'd like the reader to refer to the proposed draft accident benefits schedule. This is a little bit dry here. I've made some recommendations. The first one is with respect to who is eligible for a rehabilitation benefit. This is just a minor change that I suggest. I suggest to you to change the word "disability" to "impairment." Insurers commonly ask us, "Why does the insured need rehabilitation if they're back to work?" There are cases where the insured has an impairment, they're working, but they should still have a right to be rehabilitated. They may require just a short-course, self-directed, modified rehabilitation program in order to make them independent in their pain management and reintegrate them back into their pre-accident lifestyle. We agree that the $75,000 as a maximum is more than reasonable. We suggest that this amount should exclude case management fees and assessment fees.
Another point -- it's a minor point, but I think it's important -- is expenses of visitors. Right now it reads "impairment." I think that should be changed to "catastrophic disability." This will minimize the number of cases potentially claiming this expense. As it reads right now, it invites the immediate family to visit any accident victim, even the ones who have sustained a minor injury.
On page 29, with respect to limit on fees, it presently reads that the fees should not exceed the "maximum amounts established for each service under the professional fees schedule published in the Ontario Gazette by the Ontario Insurance Commission." I am not aware of this present fee schedule. A number of representatives, including myself, from the DACs had a meeting with eight of the major auto insurers in Ontario and we discussed a recommended fee schedule for these designated assessments. These were partly based on hourly rates recommended by our respective professional associations. I feel that the present fee structure should be maintained and that it is reasonable, as it is a combination of our current hourly rates and the complexity of the case. If there are any subsequent changes, the DACs should participate in future negotiations with the auto insurers.
On page 34, with respect to application for payment of medical and rehabilitation benefits, this proposed change will give the insurer the right to evaluate the reasonableness and necessity of a rehabilitation plan. This is an excellent change which should realize effective cost savings. As a DAC assessor, we see numerous cases where the insured has already participated in one or many rehabilitation programs and has already incurred costs of over $10,000 by the time they come and have their DAC assessment. In many cases, these rehabilitation programs have produced no objective, effective results and may have been unnecessary. Any ensuing dispute will be sent to the appropriate designated assessment centre.
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The next point is an important issue with respect to many of my colleagues being chiropractors and physiotherapists in the province. This has to do with minimum expense for physiotherapy and chiropractic treatments. The proposed change attempts to minimize the required number of treatments to be paid for by the insurer prior to a DAC assessment. In my opinion, this proposed change allows too few treatments for the average insured person and may compromise their health care. It now reads that the insurer shall pay a minimum cost for 15 physiotherapy or chiropractic treatments and/or six weeks, whichever is less. I would propose this be changed so that the insurer shall pay a minimum cost for 30 basic physiotherapy or chiropractic treatments and/or six weeks of basic care, whichever comes first. This term "basic" is important, as it will reduce costly active rehabilitation programs and/or multidisciplinary programs in the very early stages of recovery; for example, the first four to six weeks.
Basic chiropractic or physiotherapy treatments, on average, may cost the insurer anywhere from $30 to $35 per session for a passive treatment. Passive treatment is reasonable in the acute stage of soft-tissue healing. Active chiropractic or physiotherapy treatments can cost the insurer anywhere from $60 to $150 per session. Mild, uncomplicated soft-tissue injuries should fully resolve with basic chiropractic and/or physiotherapy treatments.
Another important issue during the assessment stage is the continuation of care. It is my opinion that basic to intermediate chiropractic or physiotherapy treatment should be continued during the designated assessment phase. However, these basic health care treatments should be limited to, I propose, three times per week at a fixed daily rate of $75 maximum, for example, per session, depending on the nature of the treatment, whether it's passive or active, to a maximum of $2,000 and/or eight weeks, whichever comes first. This will provide the insured with basic health care needs without incurring increased costs of functional restoration programs or multidisciplinary active rehabilitation programs during the designated med/rehab assessment period. This continued care should be paid at least until the date the insured and the insurer receive the DAC report. Insurers commonly complain to us that they're being billed $150 per day during the assessment period. The insured and their provider should be notified and advised that they do have a limit for med/rehab expenses during this assessment phase. This proposal that I'm making will make both parties more accountable to the system. It is less adversarial and the insured will not feel like they're being cut off prior to the assessment.
The next point is also an important issue. The DACs have been successful in compiling a consortium of experts in multidisciplinary settings. The DACs have offered peer review, which optimizes fair and unbiased assessments. This like-assesses-like concept should be maintained and continued in the assessment process; for example, chiropractors should evaluate chiropractic treatments, dentists should evaluate dental treatments and psychologists should evaluate psychological treatments. This eliminates any political bias with respect to treatment protocols. This has been successful in the present DAC system.
On page 40, another point which I think is important is that it presently reads, "The insured person shall submit to any reasonable physical, psychological and mental examinations...." I propose that you add the word "functional" in there. Legal representatives commonly block and interfere with functional capacity evaluations, and sometimes the whole DAC appointment gets cancelled because of this. Functional capacity evaluations are necessary to evaluate functional impairments, not in all cases but in certain cases, and will provide us with additional objective data.
With respect to the establishment of DACs, I would recommend the committee grandfather the existing DACs. The request for proposal, selection and accreditation process is very costly and cumbersome. The recommended committee governing DACs should consist of representatives from the lay public, insurers, health practitioners and the DACs themselves. It is important to have some input from the designated assessment centres.
In my opinion, there is a wide variance between insurers and how they handle their claims. One way to standardize the system and minimize costs would be to have mandatory periodic DAC assessments. This could be done at the six-month and one-year marks; this one-year mark should be standard and mandatory. This will prevent inexperienced insurers from letting the files get out of hand. We get some files at the 23rd month for an assessment.
Finally, as a small point:
"When duty does not apply
"(3) Subsection (1) does not apply if compliance with subsection (1) would be detrimental to the insured person's treatment or recovery."
The word "detrimental" is open to interpretation and may invite numerous claims from their respective health care practitioners to prevent participation in an active rehabilitation program. They should be sent to a med/rehab DAC for an evaluation.
In conclusion, overall the proposed draft on accident benefits is a progressive and positive step towards cost containment of medical and rehabilitation services. It's my understanding that medical and rehab costs the average person 30% of their rates, and 20% is disability benefits. So I feel that the proposed changes by Mr Sampson and his government will achieve some of these goals.
In my opinion, the DACs are providing unbiased and independent assessments. We have been key to cost containment in the system. We are in a unique position as we see all three sides; we see the insured, the insurer and the insured's provider. When one of these three parties becomes unreasonable, a DAC referral results. Even after the DAC, if one of these people is still unreasonable, then dispute resolution will still ensue. We provide the necessary balance and put the reasonableness and necessity into the system.
I hope our suggestions have been helpful to you and I thank you for the opportunity to present today. If you have any questions, Dr Platnick and I will be happy to answer them to the best of our ability.
The Acting Chair (Mr Steve Gilchrist): Thank you, Dr Guerriero. We have two minutes per caucus for questioning this round.
Mr Monte Kwinter (Wilson Heights): Dr Guerriero, at the North York Rehabilitation Centre is 100% of your patient load as a result of DACs or do you have those who are there for an assessment and those who have come in because they have their own personal problems?
Dr Guerriero: We have a multidisciplinary centre and part of our service is treatment. So we have chiropractors, physiotherapists, massage therapists and psychologists. A big part of our business is treating patients, and we have a lot of experience in treating patients in car accidents and work-related injuries and just general patients. The other side is doing the DAC assessments or independent assessments.
Mr Kwinter: The reason I'm asking you, and this isn't meant to be in any way derogatory or anything else, but the experience most people have is that if you go into an auto body shop and you want to get a repair done, the first thing they say to you is, "Is this an insurance claim or are you paying for this yourself?" There's a two-tier system. I'm just wondering, is there a two-tier system in a rehabilitation centre? Do you walk in, and if you're part of a DAC, there's one fee? Because you said you weren't aware that there was a fee schedule that had been gazetted. I was just curious to know if there's a two-tier system depending on who's paying for it.
Dr Guerriero: Each professional has the recommended fee schedule and we all adhere to it. You're not supposed to charge different fees for different types of patients. We charge the same fee whether the patient has been involved in a car accident or a work-related injury or is a normal patient. What I was referring to is the fees for assessments in the DACs; that's what I was referring to. Speaking of fees, DACs do not cost $6,000; an average DAC costs $1,500. So that comment made yesterday was quite inflated. The amount of people who are assigned to an assessment depends on the complexity of the case. The example given yesterday was a disability DAC; it wasn't a med/rehab DAC. If you look at the definition of impairment, that includes physical, functional and psychological, and in certain cases you have to rule out a psychological impairment.
The Acting Chair: The questioning will move to the third party.
Ms Lankin: You're referring to the lawyer who showed us a copy of a referral to a DAC that included a psychologist, kinesiologist, physiotherapist and an orthopod, I think, in that range.
Dr Guerriero: That's correct.
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Ms Lankin: There are two issues that I want to address quickly, one with respect to fees, just talking about the professions and their fee schedule for certain services: We've heard from the insurance industry that they suspect, at least, that they're being charged differential rates when it's under insurance, and they're asking for a fee schedule -- not for assessments, for medical treatment, med-rehab services -- to be regulated and published. So I'd like your comment on that.
Secondly, this really does get at one of the things the insurance industry at least is saying, which is that many of the costs they have found which have been driving up premiums are found within the burgeoning med-rehab world. We think there are some reasons for that in that people weren't getting adequate rehabilitation before and it's an important focus. But from your experience at a DAC, what are you seeing? Is there a lot of abuse by practitioners in this area, or by counsel? Do you turn down a lot of treatment plans? Do you have any idea why there is so much pressure of growth in cost in the med-rehab area, and beyond treatment plans, how we can fix that problem?
Dr Guerriero: With respect to fees, it is unethical for us to charge a different fee for an insurance case. We adhere to our college's fee schedule. But motor vehicle accident patients sometimes do have more complex injuries and they do have more baggage, so you do have spend more time with them in certain cases, and that extended time may be reflected in the fees.
Some of my suggestions do talk about basic care and rehabilitative care, which is a lot more costly, but we have excellent rehab programs in Ontario, we have excellent chronic pain management programs, excellent functional restoration programs, and it's multidisciplinary. And multidisciplinary does cost, and it is necessary in certain cases.
With respect to what we're seeing, that figure of 90% may be skewed, because we have been sent cases at the two-year mark or 18-month mark and they've already had five rehabilitation programs and that's one of the reasons why they may have been rejected. But some of the programs are time-limited. In some of our recommendations we put time limitations and/or offer alternative treatment. The treatments aren't just rejected. If a patient does have a residual physical impairment or psychological impairment, we address and give them the tools to try and become more independent in their pain management and try to reintegrate themselves back into their pre-accident lifestyle.
There is embellishment in the system. It happens with patients, with providers, and some of it is genuine and some of it may not be.
Mr Wettlaufer: Dr Guerriero, I was in the insurance business a long time, and one of your recommendations here makes so much sense it isn't funny. You say: "The insured and their provider should be notified and advised that they do have `a limit' for med-rehab expenses during this assessment phase.... This is less adversarial."
I can remember many, many years ago, when insurance companies used independent adjusters, that there was a less adversarial position taken than there seems to be now, and maybe I'm playing the devil's advocate here for a second, but I'm just wondering if we haven't replaced the expense of independent adjusters with the expense of DACs and rehab specialists and a whole lot of other things.
The DACs presently are seen by a lot of the witnesses who have come forward as not necessarily being impartial, that the insured looks upon it as having been appointed or imposed on him or her by the Ontario Insurance Commission. You're suggesting that we maintain the existing DACs. Can you elaborate on that?
Dr Guerriero: The present system is as impartial as it could be. Nothing's a perfect scenario. We see things from two sides. We see the insured, we look at the file documentation, sometimes we see surveillance, so you get two sides of the story. And we do have a responsibility. We are accountable if there is a residual physical or psychological impairment. In our own conscience, we have to make sure that they get the proper care they need in order to get them back to their normal lifestyle. It doesn't mean continuing passive treatment for their pain management on an ongoing basis and getting 0% better.
Mr Wettlaufer: The $75,000 benefit as a maximum being reasonable, and you said that this amount should exclude case management fees and assessment fees: Do you mean that the $75,000 should not include case management, ie, the benefit shouldn't include case management, or that any costs for case management and assessment should be over and above the $75,000?
Mr Guerriero: What I'm saying is that medical-rehab benefits shouldn't include case management fees, surveillance fees, assessment fees. These are all things that are ordered by the insurer, and they shouldn't be taken out of the insured's purse.
Mr Wettlaufer: Great. Thank you very much.
The Acting Chair: Thank you both for taking the time to make a presentation today. We appreciate it.
ONTARIO ASSOCIATION OF COMMUNITY-BASED BOARDS FOR ACQUIRED BRAIN INJURY SERVICES
The Acting Chair: Our next presentation will be from the Ontario Association of Community-Based Boards for Acquired Brain Injury Services. Good afternoon.
Mr Robert Thompson: Good afternoon. My name is Robert Thompson and I'm the chairman of the Ontario Association of Community-Based Boards for Acquired Brain Injury Services. To my left is Wesley Brown, who's our director of public policy. To his left is JoAnne Davis-Zulik, who's the executive director of one of our member agencies, Brain Injury Services of Hamilton. To her left is Adam Wegman, who's a board member from one of our member agencies, Peel and Halton Community Access Services.
We're an association of charitable agencies representing survivors of traumatic brain injury and their families. These agencies are all run by volunteer boards of directors from all walks of life in the various communities.
It is our association's view that the proposed legislation is a great improvement over earlier consultation drafts. However, we do have some recommendations for improvement. At this point, I'd like to turn to Wes Brown, our director of public policy, to outline those.
Mr Wes Brown: As is probably apparent from what Bob just said, we are experts in brain injury rehabilitation. We're not experts in automobile insurance. But we thought that it was important to come before the committee to give you that service provider perspective, because of course brain injury is very much interrelated with the insurance system, at least for our clients.
In this province, approximately one half of the traumatic brain injuries are the result of motor vehicle accidents. It's also a fact that the vast majority of these victims are young people between the ages of 16 and 34. One of the consequences of that is that these victims still have very long life expectancies, 35 to 50 years, typically, and it's a fact of brain injury, unfortunately, that in the severe and catastrophic cases, and often in the moderate cases, the consequences and costs of brain injury are lifelong.
In our view, when a victim suffers a brain injury in an automobile accident, certain costs become unavoidable. In an untreated situation, these costs are costs of family breakdown, incarceration, lifelong chronic institutionalization and of course elevated expenditures for health care throughout that person's life.
In our view, there are two overriding issues: The first is the reduction of these costs, and the second is the allocation of these costs in the motor vehicle context between the insurance system, the victim and the taxpayer.
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With respect to the reduction of the costs of brain injury, rehabilitation is crucial. Successful rehabilitation -- and believe me, rehabilitation is very complex in this area -- can significantly reduce the total costs of a brain injury, and in many instances, with good rehabilitation brought to bear at an appropriate stage after the injury, a person can return to gainful employment and a certain level of community reintegration, resulting in a substantial saving of the overall consequences of brain injury.
The second issue, of course, is the allocation. Hopefully we've reduced the systems with appropriate rehabilitation, properly funded, brought to bear at the right time. The question still is, who pays for that, the insurance system, the victim or society and the taxpayer?
Turning briefly to our submission, there are three points that we just really want to highlight for you. The first has to do with the timing of rehabilitation. We know, and it's well documented in the literature, that the outcome of rehabilitation is dramatically improved if good rehabilitation is brought to bear at a period of time of about 12 months to 24 months after the injury. It doesn't have to be brought to bear immediately after the injury, although obviously there are a lot of cognitive things going on in the health care system to stabilize the person, but in terms of community reintegration, that type of rehabilitation, there has to be a stabilization of the medical conditions and also a certain stabilization of the brain functions before a proper long-term assessment can be made.
One consequence of that is that we strongly feel that in terms of reduction of the overall costs of brain injury, a mechanism must be put in place where good rehabilitation is accessible and funded at the appropriate stage: we believe, on average, between 12 and 24 months after the injury is sustained. Sometimes it might be nine months, but on average, in a second year after the injury, if we can get good rehabilitation funded for the victim, the long-run total costs will be reduced.
The second point that we make is the definition of "catastrophic" injury. I believe it's well documented professionally that the Glasgow coma scale is not at all a good predictor of the outcome of a brain injury, and if we use a scale that is not a good predictor of outcome, then it is very likely that the rehabilitation that clicks in based upon an inadequate measure is going to be inappropriate and that what we really need is measures that are accurate in the victim's long-term prognosis so that the best rehabilitation program can be designed and properly funded.
The third point that we wish to make has to do with the total of the $2-million limit and the allocation of that between medical and attendant care. In the severe, and usually in the catastrophic case, $2 million is unfortunately not sufficient over the person's life expectancy. Whatever limit you choose, if you choose a limit, it's important to recognize that to the extent that the limit is established, any costs over and above that become the public's cost and the taxpayer's cost.
Secondly, with regard to the $1 million for the medical-rehab and $1 million for attendant care, we believe that that lacks flexibility. We can easily see situations where there will be very substantial arguments as to whether a particular course of treatment was medical or attendant care, particularly in this area, because it's very grey as to when it's attendant care and when it's medical-rehab. It seems to us that it would be much more efficient in terms of reducing the total costs associated with brain injury that that distinction, at least particularly in the case of brain injury, not be made, so that we don't have the arguments as to whether "You've exhausted your medical-rehab dollars and what you want is a medical-rehab expenditure," whereas the victim is saying, "Well, no, it's attendant care." You're going to have a lot of arguments with respect to that, all of which really comes back again to the allocation of these unavoidable and unfortunately very substantial costs between the insurance system, the victim and the public.
I've brought with me to help to answer any questions Adam and JoAnne, who are in the front line in the assessment and treatment of brain injury. We'll be happy to answer any questions you may have.
Mr Hampton: My question is a general one. It really concerns the last page of your submission, the conclusion. Do you have a sense of any global figures or do you have a sense of the liability that may be left for the Ontario public to pick up? You say:
"To the extent that a TBI victim's care is not covered by benefits, insurance or the victim's personal resources, the government of Ontario will be obliged to pay for the direct costs of care (medical rehabilitation and attendant care), chronic hospitalization care and for indirect costs such as dependants, costs to the correctional system and other societal costs."
Do you have a sense of how this impacts, for example, on the corrections system? Do you have a sense of these things, because I think it's very important.
Mr Wes Brown: If you're asking me dollars, I don't have a sense, and unfortunately the public accounts aren't kept on a basis where you can pull that information out. But a lot of the clients of the agency I'm on the board of and have been for 15 years come from chronic care, where they have been sometimes for eight, 10, 15 years. We're able to do something with them, but had they received treatment early on, they would have had a much better success of real, meaningful community reintegration, so there have been all those costs in the chronic care system.
One of the unfortunate consequences of brain injury is that the brain loses its ability to filter out inappropriate social conduct. So unfortunately crime among victims of brain injury is quite common, and sexually inappropriate behaviour is quite common, because this is one of the consequences of the brain injury. They no longer understand or are able to determine what is appropriate and what isn't appropriate. Many brain injury victims develop very severe psychiatric problems. It's quite different than other types, because they remember and they can sense what their previous life was, and suddenly their life is completely changed. They can't understand many things but they're very frustrated, they know they could do them before, and psychiatric problems become very, very severe.
One of the interesting things about brain injury is as you get into the rehab and a person starts to improve, they become depressed because they begin to appreciate even more the deficits which they're under, so the treatment has to be ongoing. Eventually, over a period of time, they overcome that, but if you withdraw the service prematurely because, for example, the insurance fund has run out, the person may be at a very critical stage where they are prone to depression, and suicide and suicide attempts are very common among brain injury victims.
Of course, these are serious consequences for the victim, but also for the families. There's a tremendous degree of family breakdown among the victims of brain injury, because your father went to work this morning as one individual and when you saw him next, after he got out of the hospital, he's a completely different person, a completely different personality. The breakdown in the family and the consequences associated with that are enormous. Part of a good rehabilitation program also involves the education and counselling of the family to cope and bring the family back together in a mutually supportive way, which again helps reduce the total social costs associated with the injury.
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Mr John Hastings (Etobicoke-Rexdale): Could one of you elaborate in your brief on what you call undocumented or exorbitant and unnecessary institutional care costs if there is not highly preventive rehab instituted immediately after a brain injury occurs? Second, do you have any such database that we could get for the committee? My third point, how would you structure the payments for these sorts of individuals where they're not considered or in your brief not deemed to be in the catastrophic category?
Mr Wes Brown: I think I can answer some of your questions. Certainly we would be very happy to provide the committee with the statistics we have. When we talk about the exorbitant institutional costs, there's a tremendous waste when the taxpayers are spending several hundred dollars per day for a person in a chronic care institution when if that person had been subject to some good rehabilitation early on after the injury -- as opposed to, say, $250-a-day, a $75-a-day adult service provider. On a per diem basis, over that person's life expectancy, it is exorbitant.
One of the main goals of rehabilitation is not just to help restore quality of life but to bring these costs under control, to get some community reintegration and to reduce the demands on the institutions, whatever is in this province, such as the prisons, the chronic care hospitals, the psychiatric hospitals and so forth.
Ms JoAnne Davis-Zulik: If I could interject here, the cost to the government has been enormous in sending people out of country for rehabilitation, and that's another instance where if we had had the dollars up front -- when there are dollars available for rehabilitation, people are able to get early and effective treatment here. Otherwise, they often have been sent out of country, and that's very costly.
Mr Hastings: We have made an attempt to restore brain injury treatment to Ontario.
Mr Wes Brown: That's correct.
Ms Davis-Zulik: Which is welcomed.
Ms Castrilli: I'm interested in the section of your brief that deals with the flexibility of coverage. You spend some time indicating where the deficiencies are. I wonder if you'd have any suggestions as to how you could make the coverage more flexible for those victims who aren't the most serious or catastrophic, who are the ones you're addressing.
Mr Wes Brown: One of the things I prefaced my comments with was that we're experts in brain injury, not experts in insurance and how to structure payments. What we know, though, from our perspective is that funding, even for the moderate to severe, has to be available at the right time. If it is, the long-term prognosis and the long-term costs will be greatly controlled. They won't be eliminated, but they will be greatly controlled and they'll be a lot less than what they otherwise would be.
In your deliberations and as the Legislature ultimately deals with it, if it turns out that the allocation of the cost responsibility can't be determined until two years or three years, if you're going to a partial tort system or a tort system or whatever, by all means, still make provision for funding at the appropriate time and when you do allocate the responsibility, then you make the adjustments between the payers, the public and the insurance and so forth. But get the money flowing at the right time, even if you haven't determined --
Ms Castrilli: So your issue isn't quantum, it's just timing. Is that what you mean?
Mr Wes Brown: Mainly timing, because if you don't get the rehabilitation going at the right time, we've lost a huge opportunity.
Mr Kwinter: In your presentation you talk about the Glasgow coma scale. We've had several presentations by people associated with traumatic brain injury, and I think everyone acknowledges that is used at the emergency department. Unfortunately, the insurance industry uses that as their benchmark, and if it's 9 or above, they rate them.
I have two questions. First, you're suggesting that the Glasgow outcome scale is a more reasonable one, and what I'd like to know is on what time scale? How long does it take to get an effective evaluation using the Glasgow outcome scale?
Second, the other thing that has happened throughout these hearings is dispute about the definition of "traumatic" or "catastrophic." For example, in your presentation you talk about a moderate disability being catastrophic. I would suggest that some would say: "It's a moderate disability. How can you possible categorize that as catastrophic?" Could you give me an explanation of that?
Mr Wes Brown: Joanne's an executive director. She's on the front line. She can talk about it.
Ms Davis-Zulik: On your first point about the outcome scale, we don't do that type of assessment ourselves, so to look at all the grey areas involved in predicting outcomes and the sort of multidimensional evaluations that are necessary would take more time than we have here today. We would welcome the opportunity to speak more fully to that issue. The fact remains that we need something to predict outcomes, not to measure level of colour.
The other issue of "catastrophic" and what we've seen working in the trenches with people is that while an injury may initially be deemed mild or moderate, if rehabilitation is not provided, the effects of that injury become catastrophic, and that's where the family breaks down, the job breaks down, people don't return to work. Things pile up and it becomes much more catastrophic than it would have been had rehabilitation been available and had the appropriate services been in place. That's why "catastrophic" is in quotations. The injury itself may not have been; the effects will be, if there aren't appropriate --
Mr Adam Wegman: If I can also add a point to that, the word "moderate" is the term used by the people who developed the Glasgow outcome scale and may be an unfortunate use of the term, when we're trying to compare "catastrophic" on the one hand and "moderate" on the other hand. But "moderate," from my understanding, and I am not a professional in this area, but the information I have is that it means capable of travelling by public transportation themselves and working in a sheltered environment with supervision.
If any of us sitting here were in those circumstances, we might well turn around and say, "That's catastrophic and it has a catastrophic effect on our lives." We are stuck with the terminology that's used in the outcome scale which says "moderate," but it's by no means what I think this committee would think of as moderate if it affected any one of our lives.
Mr Wes Brown: If I could make just one last point on that, all of our agencies, when we assess, we don't use one scale, one test. Indeed all of our assessments, and we all do assessments for arm's length third parties as well, are on an individual-by-individual basis, a very holistic, multidisciplinary approach, not a single formula, although we recognize that you've got certain limitations in designing a public insurance system that you have to work with.
One of the things we will offer to Mr Sampson or his staff is to make available some of the front-line people who are involved in the assessment to talk to his staff on a detailed level in an area of assessment that's very difficult and very complex, to help develop an appreciation of some of the measures of brain injury and outcome prediction. So we make that offer.
The Chair: Thank you very much. We appreciate that, and thank you for appearing before the committee today.
ALFRED KWINTER
The Chair: We now welcome Alfred Kwinter to the committee.
Mr Alfred Kwinter: Thank you very much.
Mr Monte Kwinter: Just for the record, Alfred and I are first cousins. Our fathers were brothers.
Mr Alfred Kwinter: Yes, we are.
Mr Monte Kwinter: He disclaims me and I disclaim him, but it's okay.
The Chair: That was going to be my first question. We have 20 minutes to share together if you would like to proceed, Mr Kwinter.
Mr Alfred Kwinter: First of all, I'd like to thank the committee for giving me this opportunity to appear before you to make these submissions. I am yet another plaintiff's counsel. As my paper indicates, I'm a partner in the firm of Singer, Kwinter, which has been around for umpteen years. I've practised exclusively in the area of personal injury litigation for 15 years, perhaps a little more. I've lectured on the subject on numerous occasions and have spoken and taught at the bar admission course etc.
I know the issue that I'm going to discuss has been discussed before -- I just happened to catch the hearings last night -- but perhaps what I'm going to say is worth repeating. I want to address principally the proposed $15,000 deductible in this legislation on pain and suffering awards and also to speak about the consequences of what has happened with the verbal threshold.
My position to the committee would be that this deductible is first of all totally unnecessary, and secondly it's far too high. I know you've heard that before.
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The tort system, as we knew it prior to June 1990, for motor vehicle accidents created a level playing field for the little guy, so to speak. Those are the types of people that my firm acts for. We act for the typical plaintiff, the fellow who's the warehouseman or the lady who's the chambermaid at the hotel. They're injured in a car accident, they can't work any longer, they're off work, they've got a home perhaps that they've struggled for some years to buy and they find themselves incapacitated as a result of an accident.
There's no bigger battle for an individual than to take on a large corporation. The only bigger battle might be perhaps to take on the government. The tort system allowed someone to go into court and with a good lawyer, and we are very fortunate in Toronto to have a strong plaintiff bar, a person could go in and take on a corporation and it would be as close as you could get to a fair fight. No doubt, that's what Mr Harnick has in mind when he's proposing contingency fees and class action litigation: letting people go in and fight fair.
That system had many flaws and many abuses. We all know that. For the most part, the system was plagued by minor accidents and minor claims that insurance companies, as somebody indicated yesterday, were throwing money at to settle at great cost. We're finding that the cost was in fact crippling to them. It was as a result of those types of claims, I would submit to you, that there was a cry for change because premiums were rising and the Liberal government brought in Bill 68.
Once they brought in that legislation with a verbal threshold -- you know at the time an injury had to be permanent and serious and physical in nature -- that playing field was no longer level. Suddenly many plaintiffs could not take the risk that they could take earlier. Suddenly there was a barrier put in front of them that their injury had to reach a certain level, and if the injury didn't reach that level they were out of court. It produced such a level of uncertainty that I can tell you in numerous cases people with very legitimate injuries had to be told, "Mr and Mrs Jones, if you lose this case, you could lose your house because of the very drastic cost consequences we have in our system." Many people feel that if you go to court and you lose, you just pick up your marbles and go home. When you tell them that the loser pays the costs and that it could end up wiping them out, they're stunned to hear that. That's what the verbal threshold did.
Numerous very deserving plaintiffs were stopped at the door. But it did develop a body of case law. Going back to the well-known case of Meyer v Bright, we now know, however, what "permanent and serious" meant as it was contained in the Liberals' legislation.
The NDP Bill 164 changed that to some degree and it improved it. In certain areas they introduced the claim for psychological, which was missing in Bill 68, and it also removed the requirement of permanence, which was a very needed amendment. But again, the threshold was there, and you have a body of case law now that tells you what type of injury you must have in order to take it forward. Members of the committee, the cases show that the injury has to be of significant seriousness. Minor cases just won't fly. That really, in my submission to you, solved the problem of the small cases clogging the system.
Why then, I have to ask, given what it takes to achieve an injury which meets this threshold and given the great risks involved, once someone has an injury that meets that test, is it then necessary to impose a deductible on that injury? What you're doing with a $15,000 deductible is you're taking injuries, first of all, which are serious. To attain $15,000 in damages, as I'm sure you've heard before from people sitting in this chair, one has to have a very significant injury. Insurance companies don't throw money at people and certainly they don't throw out $15,000 very easily. If one reaches the level of seriousness that the proposed legislation sets out, which is similar to Bill 164, you already have a serious injury to get there.
The problem is, a person having a serious injury is in danger of having his damages assessed at no more than $15,000, or possibly $20,000 or possibly $25,000. You have to have a pretty serious injury for that type of assessment. Why then, having reached the verbal threshold, should the insurer be able to come along and just wipe that person out and say, "Well, yes, the judge has decided that you do have a serious injury and the judge has decided that you do meet the threshold, but unfortunately, Mr Jones, your award is zero." Why is it necessary to chop at both ends?
If the verbal threshold eliminates the injuries that were clogging the system, if the verbal threshold, as we now know from the body of case law, is tough to get to from the Court of Appeal decision in Meyer v Bright and numerous other cases that have come out since then, why do we then need the deductible? In my submission to you, members of the committee, it's a double whammy to the plaintiff.
The problem of course is, and I think this has been mentioned before, that when you set a deductible at $15,000, you're not just stopping $15,000 claims; you're stopping claims in the $20,000, $25,000 and even $30,000 range. When you're talking about $25,000 claims, you're talking serious fractures, you're talking possible spinal surgery cases, you're talking possible open reductions on people who have metal inserted into their limbs; you're talking serious cases. Why should those cases be shut out? And they will be shut out, because if you say to somebody, "Even if you reach the threshold, the jury may not give you more than $30,000 or $35,000," you're going to shut those people out.
So the people are already shut out to a large extent because of the risks involved in reaching the threshold; if they reach the threshold they're shut out once again. We know that injuries are assessed based on periods of suffering. The old story is that the one-year whipper was worth $5,000 to $6,000 or to $7,000, and you've heard this before, two years is worth maybe $8,000 or $9,000; once you get to $15,000, you're talking about a minimum of three years of suffering or more. Why should a person who has suffered for three years, members of the committee, be asked to in effect write a cheque back to the insurance company, and for what reason?
In my submission, the threshold as it stands in your proposed legislation does what it is required to do. The case law is clear. Minor cases cannot go forward. Cases have to be significantly serious. In my submission, the deductible is unnecessary, and if anything, it is far too high. If I was to be asked what the deductible should be if there has to be one, I would submit that $7,500 will get rid of your nuisance, minor cases. Those were the cases that were clogging the system. Even at $10,000 you're talking a significant injury. Thank you.
Mr Dave Boushy (Sarnia): The whiplash, which is between $5,000 and $7,500, what happened to it under Bill 164? Were they still claiming it?
Mr Alfred Kwinter: No. Under Bill 164, your injury had to be serious; it no longer had to be "permanent." But the way "serious" has been defined by the courts in the decisions that have come down ever since Meyer v Bright, we now know that there has to be a very major change in one's lifestyle, in one's occupation or in one's career path to meet the test of "serious." Under Bill 164 and Bill 68, all those minor whippers were basically thrown out, so that is no longer a problem. That's why I don't understand why you need the $15,000 deductible. One gets the very strong feeling that whoever prepared this legislation never worked in this field, with all due respect.
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Mr Boushy: In answer to my question, there are no whiplash injuries at all claimed under Bill 164?
Mr Alfred Kwinter: You will see very few. I would suggest to you that you will see very few one-year whiplash injuries being claimed for tort. It wouldn't make any sense, nor would any lawyer who does this type of work take on any such cases, knowing that (a) there's a $10,000 deductible and (b) that it wouldn't meet the test. You'd be dismissed on a motion.
Mr Sampson: Thank you for your presentation. I'm having a bit of difficulty following the logic of your statement that you gave to us just as you were closing that if we had to have a deductible, $7,500 would do. If I could paraphrase you, if I can remember what you said, it would cut out the nuisance claims.
Mr Alfred Kwinter: Yes.
Mr Sampson: But then I thought throughout your presentation you were telling us that the verbal threshold was cutting out the nuisance claims.
Mr Alfred Kwinter: It does. The verbal threshold does cut out the verbal claims, but what happens is that there's a tendency, when you have a deductible, for claims to be become inflated. Everyone seems to take the deductible into account when settling claims.
Mr Sampson: Then you shouldn't be terribly fussed about any deductible, if that's the case.
Mr Alfred Kwinter: Well, no. In my submission, I think the plaintiff bar feels that a $7,500 deductible gets rid -- the insurance companies were throwing $5,000, $6,000, $7,000 at the minor cases just to close them out. Once you got over that barrier, you got into the more serious stuff. I think a $10,000 deductible wipes out a lot of valid cases. I'd say $7,500 has to be the absolute max. That's where you're getting rid of the one-year types of cases and those are the ones that were plaguing the insurance companies: the six-to-nine months, the 12-month whippers. Have I helped you there?
The Chair: Time's up.
Mr Sampson: Yes, you have, but the Chair cut me off anyway.
Ms Castrilli: Mr Kwinter, I'd like to raise an issue, which you peripherally addressed in the beginning, of legal fees. We've had some considerable testimony primarily by insurance companies that have said one of the reasons that premiums have been high and will continue to be high, right now in the range of 7% or 8% per year which is forecasted, is because of legal fees. The figures they cited were that in 1987, before no-fault was introduced in Ontario, 41 cents of every dollar was spent on legal fees, and that if we take into consideration contingency fees that may be coming in, that increase which is forecast in the rates might in fact be higher, going to double digits, and this is blamed primarily on legal fees and contingency fees. I wonder if you as a member of the practising bar, and you've been at this for a long time, might comment on those two propositions.
Mr Alfred Kwinter: I have a great deal of difficulty understanding how 41 cents out of every dollar can possibly be spent on legal fees. As all lawyers practising in this area know, first of all when a claim is settled, an award is usually attached to that for legal fees and it rarely exceeds 15% of the award. The balance of that fee is paid by the plaintiff, by the client. Insurers don't pay legal fees based on prejudgment interest. In fact, it's a negotiated fee. We heard the same thing before Bill 68 came in, that legal fees were driving the system. We said, "If that's the problem, legislate legal fees," but we heard nothing in response to that. I can't see that legal fees in any way, shape or form are driving up the cost by any considerable extent. They hardly ever exceed 15%.
Ms Castrilli: And contingency fees?
Mr Alfred Kwinter: Contingency fees do exactly what I indicated at the beginning. They allow the little guy to come into court. If contingency fees are contingent on the outcome, then it's the client who is prepared to pay that fee if the lawyer is prepared to take on the case. In my submission, that's strictly between the client and the lawyer. That shouldn't be cutting into the insurance company's share. They're still going to pay their 15% costs, or whatever it is. That's strictly between the client and the lawyer. No one is telling the client they have to retain a lawyer on that basis.
Ms Castrilli: In your view, it should not affect rates.
Mr Alfred Kwinter: It shouldn't affect rates. Contingency fees should have absolutely no bearing on rates whatsoever.
Mr Hampton: I want to go into a bit of history, since you indicated early on that you've been around this debate for a while.
Mr Alfred Kwinter: Yes, I have.
Mr Hampton: It was my understanding that when Bill 164 was first proposed, going back a few years ago, what was proposed was strictly a $15,000 deductible -- no verbal threshold at that time; in the initial stages it was a $15,000 deductible.
Mr Alfred Kwinter: That might well have been the case.
Mr Hampton: There was some concern that deductible was too high, and as I understand it, lawyers like yourself reached an accommodation with the government and with insurance companies that the deductible should come down to $10,000, but that there should be the verbal threshold language in the legislation. Is that your general recollection of how things happened?
Mr Alfred Kwinter: I recall that's how it happened. I recall being very concerned that there was again the double whammy. I didn't understand why, when you had that verbal threshold -- you see, it's one thing to have a threshold like in some parts of the United States where you have to have X number of dollars in medical bills, but the courts have set this threshold so high, the Court of Appeal has told you the type of injury you have to have, that there is really no need for the deductible. I certainly was surprised the NDP brought in both the $10,000 plus the verbal threshold plus suing for economic loss. What the consequences of that will be we don't know because the time period is just coming up for those claims.
Mr Hampton: My memory, though, is that was the accommodation that was reached: The value of the deductible would come down from $15,000 to $10,000 and in exchange there was an agreement that there should be a verbal threshold. Now, if this proposal goes forward, it goes back to the $15,000 and there will still be a verbal threshold. I guess I see your point. You really are getting a double whammy and it's the worst of all worlds. If we remove the deductible at this time, you're saying now that there is legal meaning to the verbal threshold, there will be no problem.
Mr Alfred Kwinter: That's right.
Mr Hampton: That's essentially it?
Mr Alfred Kwinter: If you bring forward a $7,500 case or a $10,000 case, which is basically a one-year whiplash, you'll be motioned immediately on a dismissal based on the case law. You just will not be able to bring those kinds of cases forward because the courts have said how serious the injury has to be.
The Chair: Thank you very much, Mr Kwinter. We appreciate your input into the committee.
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ADVOCATES' SOCIETY
The Chair: We now welcome the Advocates' Society to the standing committee.
Mr Graham Dutton: My name is Graham Dutton. To my left is Philippa Samworth. We appear to make a joint submission on behalf of the Advocates' Society. For those of you who are not familiar with it, this is an association in Ontario that is composed of over 2,000 lawyers and they deal with the resolution of disputes in every form, every court, every tribunal throughout this province. One of the mandates of the society is to initiate appropriate reforms in the legal system and to comment upon specific acts of the Legislature.
A great number of our members practise in the personal injury field, both as plaintiffs' counsel representing accident victims and as defence counsel representing insurers. A large number of our members also appear before the Ontario Insurance Commission on a regular basis. As such, we believe we can bring to this committee a perspective that deals in an objective fashion with both the concerns of those who are injured in motor vehicle accidents and the insurers who must respond to those claims.
Of course, these are not the only stakeholders. All those who pay premiums are stakeholders as well. It therefore seems to us that it is a question of fairly balancing the concerns of all of the above, the victims, the insurers, the policyholders, to produce a fair and reasonable automobile insurance compensation system which is both affordable and promises price stability.
It's Thursday afternoon, the last day of a four-day session of committee hearings. I'm sure you have heard from more than one speaker the two last attempts to reform automobile insurance by the Liberal government under Bill 68 and by the NDP government under Bill 164. I do not intend to go into this in any detail. I will say that Bill 164, by denying the right to claim economic loss, totally denied the right of innocent accident victims to recover their full economic losses.
This is in contrast to the promise made by Premier Harris to bring back the right to sue for significant economic loss. We, the members of the Advocates' Society, believe this promise can be kept and at the same time provide a fair and equitable system of providing compensation which balances the legitimate concerns of the policyholders, the accident victims and the insurers.
If this point had not been brought out by earlier submissions, I think it important to note that approximately one half of the premium dollar goes to the payment of physical damage claims; that's to say, the cost of repairing motor vehicles. It seems to us, and I'm sure to you, that it is almost an immutable law that the cost of repairing cars, with all their electronic components, will always go up and never go down. Therefore, the balancing of interests I mentioned can only be achieved by using one half of this dollar. Within that one half, medical, rehab and other costs, as you are aware, I'm sure, have also escalated, but this may not be immutable and indeed ought not to be.
You have already received submissions from the Canadian Bar Association, the written submission of John McLeish of the Ontario Trial Lawyers' Association, and Stephen Malach, among others. We have had the opportunity of reviewing all of these submissions, and in the main the Advocates' Society supports those positions. At the risk on this Thursday afternoon of giving this committee some information overload, we would like to deal briefly with those submissions we feel should be addressed by this committee, the government and the Legislature.
Economic loss: The right to sue for 85% of economic loss is not, in our opinion, the right to sue for "significant economic loss." Consider the following:
Prior to June 22, 1990, this right had always existed for victims of motor vehicle accidents in this province.
Other than at-work accidents covered by the Workers' Compensation Act, every victim in every accident in this province has the right to sue for full economic recovery; that is to say, in slip-and-fall cases at a store, on a sidewalk, wherever; product liability cases; boating accidents; medical malpractice cases and so on.
In jurisdictions with comparable legislation to this, such as in the United States, the right of innocent accident victims to sue for full economic loss is not restricted or circumscribed.
The reduction to 85% of net income is contrary not only to the common law principle of placing the accident victim in the same position he or she would have been had the accident not occurred, but is also contrary to the basic concept of fairness, particularly when one realizes that contingencies will already have been deducted by the trier of fact at trial before the imposition of this cap.
Contingencies, as I have described, are those that are always taken into account at a trial by a judge or a jury for the possibilities of what could happen to that person. The person, he or she, could lose their job because it's been terminated, because they are fired, because of a recession, because of any number of things, as a result of which, contingencies are always taken into account to reduce whatever the present value of that future economic loss is. This imposes another reduction on top of the first reduction, and I think that's important and cannot be overstressed.
Lastly, and I suspect to everyone most importantly, the cost of restoring the right to sue for significant economic loss is, we believe, significantly less than what perhaps some members of this committee may have understood it to be, and can be in our opinion easily achieved by implementing some, for instance, but not necessarily all, of the recommendations contained in the submissions of Mr Malach.
With respect to the right to sue for the loss of dependency arising out of fatal accidents, the right to sue for loss of future earning capacity and the right of students or those currently between jobs, we understand that changes will be made in the legislation to reflect that these rights have not been extinguished. If indeed this is not the case, we would obviously file written further submissions on that issue.
Ms Philippa Samworth: Turning to no-fault benefits: As Mr Dutton mentioned, the Advocates' Society endorses Mr Malach's paper, and you've already heard from Mr Malach. There's little doubt that tighter controls to combat waste and fraud can only have a beneficial effect and impact on the cost of insurance. We're not going to deal with the specifics of the changes, but there are a couple of points we'd like to make.
First of all, we refer you to studies that have been done in Quebec and elsewhere which question the effectiveness of treatment or rehabilitation for mild to moderate soft tissue injury, which is the most common injury arising from a motor vehicle accident. We highly recommend that the committee explore and review these studies. We believe that most medical personnel recommend early, brief, but intensive series of rehabilitation treatments, such as physiotherapy, with an early return to normal activities. This type of approach produces the most positive results and is cost-effective.
Secondly, as lawyers and as members of the Advocates' Society, we must take strong exception to the comments of David Corey, which were reported in the Toronto Star on February 21 under "Insurance Changes May Hinder Care, MPPs Told" where Mr Corey stated, "Lawyers often discourage their clients from participating in meaningful rehabilitation prior to trial in order to augment the size of the future lost income claim."
Mr Dutton and I have over 50 years of experience between us in the area of personal injury, and I won't tell you who bears the lion's share of that. This has not been our experience and it is not to our knowledge the practice of lawyers with whom we work.
Alternative dispute resolution: We believe that the proposed neutral evaluation process that has been proposed for no-fault benefits is flawed.
Firstly, the referral to neutral evaluation should be on the consent of both parties and not made unilaterally by the mediator. The person conducting the neutral evaluation should be agreed upon by the parties and not chosen at the whim of the director.
Secondly, as the neutral evaluator is, in this legislation's schedule, to provide his or her report to the arbitrator hearing the case, it is our view that an open and meaningful discussion of the parties' positions will be unlikely in this process. In the back of the participant's mind will be the knowledge that the positions they take at the neutral evaluation will ultimately be reported to the arbitrator, and this can result, in some cases, in the parties taking unrealistic positions.
While we support mandatory mediation of the tort claim, we believe there should be one session of mandatory mediation, irrespective of whether the statement of claim has been issued or not. Experience, and particularly my experience at the commission, of mandatory mediation of accident benefits tends to suggest that mandatory rather than consensual mediation in tort claims will result in cost savings through early resolution.
The interface: We simply agree with our colleagues at the CBAO and the Ontario Trial Lawyers' Association that the problem of the interface must be dealt with and we offer our assistance to you in that regard.
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Mandatory structures: We do not believe these are necessary. The Courts of Justice Act allows a judge, in his or her discretion, to impose a structure. This is appropriate because the judge will have heard all the evidence, know the circumstances of the case and can make a reasoned decision as to the appropriateness of the structure, keeping in mind the evidence they've already heard. A mandatory imposition of a structure will in some cases create an unfair result, such as when a small business owner, who by reason of injury has lost his or her business, wishes to use the proceeds of the judgement to re-establish him or herself and a structure would prevent them from doing so.
Lastly, the deductible: You've heard a great deal about that, but it is the Advocates' Society belief that contrary to some expectations shared by the members of the insurance community and the members of both preceding governments, that the imposition of a threshold in Bills 68 and 164 has not resulted in an erosion of that threshold, but rather a genuine reluctance, shared by most if not all plaintiffs' counsel, to run the risk of incurring the expense of bringing an action, where the assessment would be above but close to the threshold. The effect of raising the threshold merely exacerbates this trend, thereby increasing the size of the class who will be denied the right of recovery for pain and suffering. These victims, many of them members of the voting public, we believe, will carry with them only a painful reminder of the accident and nothing else.
Mr Dutton: What do all parties want to achieve? I think I can use the word "parties" in its political as well as its larger sense. Simply put: A good product at a fair price; a product that stops the double-digit escalation of insurance premiums, notwithstanding the increase in the physical damage aspect of the premium dollar, and that creates stability in the market for the purchaser; a product that is fair for accident victims, both those at fault and those not at fault, and that recognizes the distinction between them.
If we at the Advocates' Society would ask one thing from this committee or from the government, it is that you cost how much will it cost to implement some of the changes we have discussed and suggested and only then, after costing, make up your minds.
We would be more than willing to provide any assistance which you may require in this ongoing process, and would be pleased to respond to any questions any member of this committee might have.
The Chair: We have time for a very short round of questions. Could we start with Ms Castrilli. A minute would be nice.
Ms Castrilli: A minute, oh dear, I have so many questions. Let me focus on one area then. Under the revisions to no-fault benefits, you allude to some studies in Quebec. I wonder if you might elaborate on the substance of those studies for us.
Mr Dutton: I think Ms Samworth has more knowledge of that than I.
Ms Castrilli: It'll have to be brief.
Ms Samworth: I'll be as brief as I can. There were some extensive studies done in Quebec which have been reported, and I'd be pleased to provide you with a copy of that report, which deal particularly and almost primarily with injuries to the neck. The studies dealt with the efficacy of the treatment that was received and the results achieved through that treatment. The quick response is that the main result of that study was that drugs, physiotherapy and much of the chiropractic treatment, in general things that we see, are not effective on a long-term basis, only on a very short-term basis, and the most important thing in these mild to moderate cases is to get the person back to work, and treatment is contraindicated to that. It lends itself to the perception of disability.
Ms Castrilli: I'd be delighted to receive the study.
Ms Samworth: I'll send it up to the committee.
Mrs Marland: I think we'd all like it.
Ms Samworth: I will send you 30 copies.
The Chair: If you send them to the clerk, we'll make sure they're distributed. Thank you very much.
Mr Hastings: Mr Dutton, I wonder if you could provide this committee with some further documentation on page 3 dealing with restoring the right to sue. When you comment that significant economic loss may not be as significant as the public perception is led to believe, do you have such documentation you could provide this committee with?
Mr Dutton: Not at this time.
Mr Hastings: At a later date?
Mr Dutton: I have some approximation, yes. I will have that information and can do so.
Mr Hastings: Can you elaborate at all on an average cost-per-case basis, what that might be, ballpark, even, from your own experience?
Mr Dutton: No, I couldn't really respond to that question in that manner. I can certainly tell you that the cost of restoring the right to sue is reflected in the cost to those that purchase motor vehicle insurance as an addition to the premium dollar. It is more than offset by taking some of the reforms that ourselves and other submitters have suggested, so that this balance can be achieved. Those figures, as to the cost, will be available very shortly. And I would be only too happy to make those figures available to the committee. I'm thinking they should be available within the next few days. I had actually hoped to have them for this presentation, but unfortunately couldn't get them.
Mr Hastings: Thank you very much for your remarks.
Mr Hampton: I really want to ask you a question that pertains to the point made by the earlier presenter. You deal with it but in a very general sense. The earlier presenter said that moving the deductible from $10,000 to $15,000 was going to be most unfair. And then he made the point that really a deductible is not necessary at all any more, because the courts have essentially determined what's serious and what's not, so you don't have to deal with that issue. Do you want to delve into that?
Mr Dutton: I am sure we can both respond. I'll respond briefly and then I'm sure Ms Samworth has got some comments. No matter which way you cut it, the injured victim ends up with less money than had there not been a deductible in place. But what we are saying is that, contrary I am sure to the expectations of the insurers and indeed other parties, that when the deductible was imposed, it was anticipated that there would be an erosion of that limit as determined by the courts. In fact, it simply has not happened in our experience, as a result of which, if you have a $10,000 deductible, effectively those that have cases that are worth around that and perhaps more, won't take them to court because the risk is too great.
If you increase the deductible, you increase the size of the class that's simply not going to be getting any recovery. Yet you're then getting into the area, with a larger deductible coupled with the oral threshold, where the more serious injuries that can pass the threshold are still not going to be advanced to court, because of the implication and the imposition of the deductible. There's not enough money and the risk is too great.
Ms Samworth: If I could just comment very briefly, I know we're out of time -- the combination of the verbal threshold and the deductible works to keep out the claims that should never be there in the first place. If there were no monetary deductible, some people may consider themselves to qualify under the threshold, and they may very well fill up the system with efforts to make their claims.
The fact that there is a monetary deductible discourages them from doing that because their recovery would never be at that level, but at some point, the deductible gets too high and discourages proper claims that should be either before the courts or recovering through the settlement system.
The $50,000, in our view, is just too high and it eliminates some claims that validly should be allowed.
The Chair: Thank you very much. We appreciate your presentation from the Advocates' Society today.
COLLEGE OF CHIROPRACTORS OF ONTARIO
The Chair: We now welcome the College of Chiropractors of Ontario. Welcome to the committee.
Dr Leo Rosenberg: I'm Dr Leo Rosenberg. I'm the president of the College of Chiropractors of Ontario. With me is legal counsel, Linda Bohnen. On my far left is a public member of the College of Chiropractors, Carole Conti from the Markdale area, and from Hamilton, Dr Roberta Koch. Roberta is the treasurer.
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I realize that you've had a long few days here. I've been following it on television, and it reminds me of the chiropractic truism that your concentration level is about very relative to your sacroiliac comfort level. So I realize you've been sitting for a long time. I almost feel like getting up and starting a fitness class here, but that would be considered rehab and we can't afford that.
Mrs Marland: We'd enjoy it, though.
Dr Rosenberg: You would enjoy it. We do not want to read you a brief because we know you people can read. What we do want to do is to focus on a few ideas and handle your questions. The College of Chiropractors is one of the disciplines which is part of the Regulated Health Professions Act and the Chiropractic Act and our function is onefold: It is to govern, in the public interest, the administration of chiropractic services. We are one of six authorized to communicate a diagnosis by the RHPA and one of five authorized to use the title, "Dr." Our expertise is neuromuscular skeletal: basically nerves, muscles, bones and the locomotor system and how it effects your health.
This has been the centennial year of chiropractic and I have to say that, having practiced for 35 years, I'm very proud of what transpired during this last year. What transpired was a validation of the effectiveness and the cost-effectiveness of chiropractic care. I'm taking this opportunity to give you a little commercial, but I will say that as such, we have seen that patients can be prejudiced against for choosing the most cost-effective care. The reason we are here and the reason that we literally harangued a few people to be here, namely the clerk and Mr Sampson's office, is because we believe that the public has a right to the most cost-effective care, whether it be paid for by auto insurance or by OHIP or any other third party.
The evidence validates that the public is served well with this care and we would ask you to consider these recommendations. If you look at the brief, you will see that under section 3, there are simplifications of our recommendations. If I may just very briefly not follow those, but just to say that we'd like to see the language changed: that instead of the word "treatment," "services" be used. It's very simple. Is a diagnosis or an assessment or an X-ray a treatment? Not usually in a chiropractic office. As you know, an X-ray could be a treatment in a radiologist's office, but in order to cover the gamut of chiropractic service -- and really most of the other professional services -- we would suggest that you change the word from "treatment" to "services."
We would also suggest that coverage become immediate from the time of consultation -- I think it has to be elaborated -- from the time of consultation: If a patient has an accident of January 1995 and they see the chiropractor in July of 1996, then they've had their six weeks time period. So we would like to see it specified that their coverage become immediate and an allowance of 14 days to submit the treatment plan.
One of the problems you have to realize is that textbooks have described, in soft-tissue injuries like whiplash, those first 36 to 48 hours are the golden hours. That is the time the patient should be advised what to do, what not to do, and treatment should be started immediately. Most of the research supports that evidence.
Coverage should continue until an independent DAC is completed because you, as a patient -- a patient could be cut off treatment when, indeed, what it will do is interrupt their treatment until they await a DAC, until they await the assessment. And what would happen, then, if the patient is almost ready to go back to work, they're cut off treatment, they can't go back to work, it ends up costing more money in the long run and more disability and more pain and more suffering.
A DAC should include the same health care practitioner. It's inappropriate to expect a chiropractor to make a judgement on a brain surgeon and it's inappropriate for a brain surgeon to make a judgment on a chiropractor.
Finally, I'll just say that we must have timely dispute resolution. The patient cannot be without care. I must say that the issue of the Quebec study was mentioned. The Quebec study is one of numerous studies that are available and it has to be taken in context, not out of context. I'm sure other members here will discuss that.
I can only tell you, and I'll summarize, that not very long ago in terms of my practice life, Merrijoy Kelner, Oswald Hall and Ian Coulter did a study for the University of Toronto, faculty of medicine, division of epidemiology. It was called Chiropractors: Do They Help? It was a national investigation which cost, even then in 1980, over $1 million. What they found, very simply stated, was that of patients who consulted a chiropractor, 76.8% had medical care for that same condition, 22% had had physiotherapy for the same condition and about 92% expressed satisfaction with their results.
We believe it's in the interests of the public to see that chiropractic care is made available, and is made available without prejudice. If there's any way that you can create a study of what is cost-effective -- and that's the real nutshell here: What is cost-effective care? I watched people here in the last few days make presentations and I question going to a fancy restaurant with a lot of dishes, very little food and paying a big bill. I question the efficacy and cost efficacy of some of the rehab services and I ask you to question that. I think you will have to in order to answer the question of what you're going to pay for, how soon and for how long. Again, we would gladly offer our assistance in further studies.
I would ask our public representative, Carole Conti, to make a comment, and with that, we'll entertain your questions thereafter.
Ms Carole Conti: Members of the committee, I'm a public member at the College of Chiropractors. As our president said, we are regulated under the RHPA, which ensures that the public receives helpful and safe professional health care. It also ensures that the public has access to the services they desire. I would like to just put that into your mind, that we must not under any circumstances, in any way, stop that freedom of choice for the public that they can go to any health professional they desire and that they have access to the care they need immediately. A service should not be delayed because of a piece of paper. A piece of paper can always be produced, but someone's good health cannot.
Also, I don't know if Dr Rosenberg mentioned that within the college itself, we are mandated to come up with standards of practice, guidelines; we have a complaints and discipline process. So if there are any areas where the public or the insurer has questions about chiropractic care, they have a place to take their beefs, so to speak. That's all I have to say at the moment.
Ms Lankin: It's a pleasure to see you again. If you have been following the hearings, you'll know that we've heard from lots of folks, certainly a number of different health care practitioners, some of whom have argued for the efficacy of physiotherapy or for occupational therapy or vocational rehab, which is outside of the regulated health professions. We had a medical doctor here today who talked about the need to make sure that the professional is competent in terms of prognosis and held accountable for that prognosis. We've had folks from outside the practitioner field being concerned about huge numbers of rehab centres springing up and whether or not, in a sense, the system was getting ripped off by too much good care, or perhaps not enough good care and just excess care.
I wonder what your advice would be to this committee, because it's very difficult for a group of legislators to sort through what have been, I would almost say, perennial turf wars that have existed between various professions. Yet, we can also see the value of multidisciplinary teams, and when they do work together, the increased value to the patient.
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We've heard about the Quebec study, and that's something I'd like you to comment on. We've heard about the need to have standard treatments. We have ICES, which is doing epidemiological work in terms of peer review of medical treatments, we have the Manga report with respect to chiropractic, but we don't have a lot overall, in terms of when a patient first comes in, how they should be assessed and the appropriate provider be selected and the appropriate treatment. Can you give us some advice on that?
Dr Roberta Koch: I'll try, with the help of my colleagues. As the College of Chiropractors, we're not interested in turf wars, of course. We are interested in governing chiropractic in the public interest. We can tell you the difference legislatively between the professions, but I'm sure you know that, and Leo has already described that.
As far as evidence of effectiveness when it comes to the injuries you're dealing with under the Automobile Insurance Act, the Quebec task force dealt with short-term studies only and it came up with an affirmation of early active intervention as an effective approach to motor vehicle accidents. Early active intervention included what chiropractors do via adjustment and manipulation. There is no evidence concerning long-term care at the present time; not that it's not effective, but there doesn't appear to be any evidence regarding long-term effectiveness. So the Quebec task force just dealt with short-term care and affirmed that early active intervention is in fact effective.
As you know, with low-back conditions there are volumes of evidence, and the volumes of evidence include the Manga report, which is the Ontario government's study that was a third-party look at what's effective in care of low-back conditions, and of course chiropractic was seen to be cost-effective. We also have third parties saying the same thing. The Agency for Health Care Policy and Research out of the US and the UK guidelines say the same thing as the Manga report said. These are all very credible bodies that verify the effectiveness of chiropractic care.
It's hard to look at cost-effectiveness on the evidence, because there is little evidence. I think what will help this committee is to encourage a guideline standards process. We at the CCO have recognized that and we're in the process of developing guidelines and standards for rehabilitation. I think that will go a long way to promoting cost containment. As Carole said, we have a complaints and discipline process and we would encourage that to facilitate complaints to colleges regarding abuses of the system.
Mrs Marland: I have a couple of questions, one coming off a presentation this morning by the Ontario Medical Association. I'll just read it very quickly: "Many physicians provide physical therapies like manipulation to their patients. We recommend that physicians be added along with physiotherapists and chiropractors in section 42(6) of the accident benefit regulation."
I asked the OMA if they felt that was based on the ability of every physician -- I'm paraphrasing what I said because it has been a long day and I can't remember exactly the wording. What I was getting at was that there are general practitioners in medicine, as there are in dentistry and any of the health sciences, and most of them will not go into something that is specifically a specialty. I referred to the fact that chiropractors go to school for six years to learn one thing -- I'm generalizing when I say "one thing" -- compared to physicians who have to learn a whole lot of things in a six-year period in order to come out and be general practitioners. I just wondered if you would like to give your opinion; I'm not suggesting a turf war. I'm talking about a professional opinion from your point of view.
We keep hearing over and over about the necessity for early intervention. I'm wondering if you can tell us, because I don't think any of us here are professionals in health care or have been -- my feeling about treatment is that the sooner I get to it, especially if it requires a series of treatments, which perhaps physiotherapy and chiropractic treatment might fall under, the greater my recovery and the less damage is done while I'm waiting for the recovery. This is purely in layman's terms. So I'm wondering if you have any idea how much longer the treatment can be for a lot of these accident victims because they didn't get started early enough and therefore the cost is greater; that's the point.
Dr Koch: To the first part of your question concerning a physician's manipulating, as was said before, CCO is not interested in turf wars, and the only reply that would be politically correct would be that 95% of manipulation is done by chiropractors. We know that. That answers that question.
Ms Lankin: It is within the scope of practice for them. There are some who are trained to do it.
Dr Koch: Yes. RHPA has given the licence to act -- it's not called manipulation; it's the definition of manipulation to chiropractors, physios and medical doctors, but 95% of manipulation in Canada is done by chiropractors.
To the second part of your question, the only evidence that exists out there concerning neck injuries, which is the Quebec task force, is that early active intervention is appropriate and the best venue for an injured party. Other than that, you can't say anything about what the evidence shows because there is no evidence pertaining to anything else. Leo talked about the golden hours of an injury. It stands to reason that advice given in the first 36 hours is crucial.
Ms Linda Bohnen: I'd just like to add that the questions you're asking I think are indicative of the fact that it's really a multifaceted problem to which unfortunately there's no quick fix. Every profession has to establish standards of practice that are real and make sure that their practitioners adhere to them. Unless we're prepared to abandon the principle of freedom of choice of practitioners, accident victims will go where they want to go and ought to receive the most cost-effective treatment wherever that is, and that has to be worked on on a number of fronts.
Mr Monte Kwinter: I've been sitting here for four days now and I am getting more and more to the point where I think we have an absolute conflict in the presentations that are here. A lot of the presentations that are made by organizations like yourselves I think should be made really to the Ministry of Health, under OHIP, to say, "We should have the ability to deliver this kind of thing." We're talking insurance, and when you have insurance and insurance has to be rated and priced, the only way that an insurance company can do that is to say, "What is my risk?" If it's open-ended like OHIP is, then I have ultimate risk, and who wants to be in that business? I may not survive the first year because it is totally open. So what I have to do is, what is the most reasonable package I can put together that will service the greatest need at a certain price? Price is driving this whole exercise.
The question is, how do you do that? You raise the question, should it be 16 visits or should it be 16 weeks or whatever it is, and all of that drives the cost. The insurance company is saying: "If you want me to price it, tell me what I'm pricing. If you're saying to me price it with no cap, no open end, how can I price it? I'm not going to be in the business." I think that is one of the major problems we have in this exercise and I would love to get your reaction and if you have any solutions to that.
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Dr Rosenberg: My response, if I may, Mr Kwinter, is that we're not saying to open it without checks and safety measures. We're saying we should have standards, and we have them, and the CCO is in the process of making those things law. We're saying that there should be DACs and that those DACs should involve chiropractors and that the patient should not be prejudiced, but that it isn't open-ended. If the DAC says no, then no is no, so that the insurance company would have the benefit of some form of veto in the form of a DAC. So we do not anticipate that.
One of the problems that I foresee here is that if the low backs were the issue here, is a lot of the evidence is here. The statistics are available -- how many adjustments does it take, how long does it take with these different therapies? But unfortunately with neck injuries, which is the most common thing involving motor vehicle accidents, that research, the chicken has come before the egg, and that creates a tremendous problem for this committee, a tremendous problem.
The Chair: I'd like to thank the College of Chiropractors of Ontario for its presentation today.
ACQUIRED BRAIN INJURY NETWORK
The Chair: We now have the Acquired Brain Injury Network. Ms Vander Laan, welcome to the committee.
Ms Rika Vander Laan: Just by way of introduction, the Acquired Brain Injury Network includes a number of organizations and agencies in the public sector that provide service and support to people with an acquired brain injury and their families. Members of the network play a significant role in the diagnosis, assessment and treatment of individuals who have sustained a brain injury at the acute care phase in the trauma programs at Sunnybrook Health Science Centre and St Michael's Hospital. Rehabilitation service and ongoing assessment of progress and support is provided on an inpatient basis by Queen Elizabeth Hospital, Riverdale and West Park, and in the community by Community Head Injury Resource Services, the Home Care program and McLeod House. The Head Injury Association of Toronto is also a member and provides support and information to persons living with the effects of brain injury and their families. The network also has representation from the University of Toronto to try and link that research and education arm.
As a network, we have been following the proposed changes to the Insurance Act legislation and, through discussion within the network, have prepared this response to address a few specific elements of the changes. Our comments and recommendations come from our collective years of experience. I've heard a lot of numbers thrown around and I would think, if I started to add up all the years of experience in our network, we might be approaching 500 years or more.
Our focus in the network is enabling clients to access services and support in a way that's equitable, addresses their needs in a timely manner and is directed to the goal of enhancing their ability to function at an optimal level and also supporting their quality of life.
We appreciate the need to develop legislation that's practical, simple, cost-effective and equitable, and we don't envy you your task. It's critical, however, that the legislation takes into account the subtleties and complexities of injuries such as brain injury, so that accident victims do not fall between the cracks and suffer additional and secondary assault related to access to compensation benefits. So we ask you to consider the following points and recommendations.
Brain injury as a separate entity: Since brain injury is distinct in its complexity when compared to other injuries that result from automobile accidents, we would recommend considering it as a separate entity. Differentiating brain injury from more simple injuries such as soft-tissue -- not they're always simple -- might address some of the concerns that we have around definition, levels of severity and fraudulent claims. It may actually be unrealistic to try and treat all injuries in a uniform manner.
The impact of brain injury on an individual's life may be invisible to an uninformed or unqualified observer. It's not only the individual's ability to walk, talk and function in obvious ways; for example, their ability to reason, to process information, to problem-solve or develop relationships may be significantly impacted by the injury. The broad definition in the legislation of "catastrophic" does not capture the multifaceted nature of brain injury. The complexity of brain injury in reality just does not lend itself to simple catastrophic versus non-catastrophic differentiation.
Use of the Glasgow coma scale as the measure to determine level of severity of injury is of great concern; I'm sure that's not the first time you have heard that comment this week. A Glasgow coma scale score of nine or less is in and of itself neither a reliable nor a valid predictor of how a person may function in the future. There is a host of other factors to take into account; for instance, something as simple as if someone has been drinking at the time of the accident. The level of alcohol may actually influence the Glasgow coma scale and the score may actually be less. In addition, the injured person may not be rated immediately at the time of injury. If they had their accident in an area where professionals are not familiar with the Glasgow coma scale, they may not be rated until several hours into the injury.
We recommend, around definitions, that the World Health Organization definitions of "impairment," "disability" and "handicap," which are common language universally, be utilized consistently in legislation and related documents. We believe for individuals who have sustained a brain injury, the disability and residual handicap post-injury are much more relevant than a Glasgow coma scale score at the time of injury.
Recognition of the lifelong nature of the impact of a head injury: The impact of a brain injury, be it severe, moderate and sometimes even mild, may be a lifelong issue. As the most frequently injured are individuals of a very young age, lifelong means decades, not 10 or 15 years. The definitions, classifications and subsequent compensation proposals should reflect that reality. Compensation, especially for rehabilitation and attendant care, in those situations may be less than adequate and may force clients and families into inappropriate institutionalization, compromising the quality of life of the individual and at a considerable cost to the public system. The clarification of definitions and acknowledgement of the multifaceted and long-term nature of brain injury is essential to developing a system that addresses the needs of a person with a brain injury.
Objective and timely diagnosis, assessment and payment of services: Diagnosis of a brain injury, assessment of impairment, disability and handicap, together with recommendations for treatment, must be carried out by individuals skilled and experienced in brain injury. The assessment should be multidisciplinary, drawing on the expertise of the various disciplines which bring specific and in-depth knowledge and experience to the process. Objectivity of the assessment and treatment plan can be achieved by ensuring that the individuals who do that assessment have no vested interest in the outcome.
Duplication of assessment, at times to achieve a pre-determined outcome for the insurer, is currently occurring at a considerable cost. Cost to the injured person is measured in the effort and energy of repetition of assessments and delay in initiation of treatment. In current practice, repeated assessments are paid out of insurance funds while comprehensive, multidisciplinary assessments conducted in and paid for by the public system are sitting on charts and not being utilized. When treatment recommendations based on such assessments are made by professionals who have credibility in the field and are associated with an agency/organization that has similar credibility, we believe such assessments should be accepted and honoured.
We support the notion of the dispute resolution process being conducted by independent bodies such as DACs and that their recommendations are binding. It is essential that DACs conducting assessments of individuals with a brain injury are staffed, again, by a multidisciplinary team who have proven expertise and credibility in the field of brain injury rehab and not just general rehab expertise. The key is that the appeal process be conducted in a timely manner to assist the injured person in accessing the most appropriate treatment quickly and prevent delays which could have a negative impact on outcomes.
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The time frames laid out in sections 42 and 43 of the regulations are helpful but leave a question as to how adherence to those time frames will be monitored and in what circumstances the dispute process is activated. The time frames could still result in delays, perhaps a month, in many cases considerably longer when there are repeated requests for additional information. Such delays have the potential to slow down the individual's progress and add unnecessary costs.
Standards: Perhaps here we address the question that was just raised. Recognizing that insurers are not experts in brain injury, making equitable decisions about claims is difficult. We recommend that a multidisciplinary task force be established to work collaboratively with insurers to address some of the issues that have been of concern for a considerable length of time for providers, for clients and their families, as well as for insurers. We see an important role for our network and, in the future, for the new teaching rehab facility to be developed in Toronto in working with insurers to develop protocols and procedures that will ensure clients receive the services required.
As professionals and organizations, we already have in place the tools, the processes and the skills to determine what's reasonable and necessary in terms of rehabilitation and care for persons impacted by a brain injury. We are eager to work with insurers to address the issues so that the goals of effective use of funds and equitable and timely access for clients to insurance funds can be met. Expedient and fair claims management will reduce costs to the insurers and also prevent additional aggravation and insult for injured persons and their families, especially in times of crisis.
Education about rights under the legislation: Clients and their families, in the midst of crisis, need to know their rights in terms of claims settlement. We see that as the responsibility of the insurers and suggest that be clear in the legislation to ensure that individuals have adequate and easily accessible information about claims and appeals, as is currently not the practice. We are committed to working with insurers in developing a process that will ensure a consistent method for informing injured persons and their families about procedures, time frames, appeals and compensations.
Compensation: Compensation is a critical element of the insurance legislation. Concepts and definitions tied to compensation -- such as reasonableness, level of severity, catastrophic -- cannot be determined by a singular yardstick. In the field of brain injury, the outcome research is still very young. There are no easy answers to predict outcome of a brain injury, and what is meaningful for a brain injury is usually not comparable to outcomes of another type of injury. There are efforts under way to develop multifaceted scales that attempt to capture and define more clearly the long-term impact of brain injury.
For instance, the Ontario Association of Speech-Language Pathologists and Audiologists has a task force that has developed a scale that takes into account the complexity of the physical, functional, cognitive, communicative and emotional factors that come to bear as someone's life is altered after a brain injury. The Glasgow outcome scale is another instrument that attempts to address the impact of brain injury, although it's a very gross measure. We recommend that alternatives be developed with experts in the field to address these concerns and complexities so that the compensation takes into account the total impact on the injured person's life and not only the visible handicap.
Our last point is around tort, and I do that with some hesitancy, as we don't expect the legal profession to understand the medical implications of a brain injury. Those of us in the health professions do not necessarily understand the intricacies of the legal profession, so my comments are broad.
The reintroduction of elements of a tort system is a regression to a previous pattern of delays for individuals with injuries that are less visible, especially those of a cognitive nature. The tort system has often been described by injured persons as a second assault where the onus of proof is on the injured person. We question whether such a system benefits the individual. If the goal is to channel dollars to the individual who needs it -- namely, the injured person -- we believe the hidden cost of a tort system may indeed detract from that goal.
We thank you for the opportunity to share our experience and expertise with you and ask that you take into account our comments and recommendations as you draft final details of the new legislation. If you require further information, we will be happy to follow up with you around any specific issues and make ourselves readily available. I'd be happy to answer any questions.
Mr Wettlaufer: I have a little bit of concern with your question on tort, or your suggestion on tort. The feeling we have as a committee, I'm sure after four days, is that we have to reach a compromise here. You've suggested that tort is a regression, and yet you said earlier in your submission, "It is essential that DACs conducting assessments of individuals with a brain injury are staffed by a multidisciplinary team who have proven expertise and credibility in the field of brain injury rehabilitation." It would seem to me that if we have experts in one area who determine that this individual, this claimant, is a brain injury sufferer, then there should be no problem in defining whether or not he or she has been injured and is therefore entitled to some tort.
Ms Vander Laan: That's true. As I said, I'm making very broad statements, not understanding the system all that well. I think the process of tort in the past for people has been extremely traumatic and may have caused delays where delays were not necessary. I think timing is a very critical factor, whatever process is put into place, so that there's timely access to rehabilitation with least aggravation to the individual. For someone who's had a brain injury, the whole process of trying to access funds -- often it's the family that has to take on that role -- and trying to access compensation really adds to their stress level. However that process can be put into place to make it as easy for them as possible is very critical. I think that's probably the most important point: timeliness and easy access.
Mr Wettlaufer: I don't think anyone would deny that.
Ms Castrilli: I'd like to return to the tort issue for just a moment. We've had conflicting evidence on this point. We've had lawyers who appeared, and doctors and physiotherapists and chiropractors and victims. They've said they're in favour, they're not in favour; it victimizes, it doesn't victimize. If you don't have a tort system -- I'm not quite sure what it is you're advocating. Are you advocating no-fault?
Ms Vander Laan: The no-fault system has facilitated rehab for people in brain injury tremendously. It has allowed access to rehab services that we did not have before.
Ms Castrilli: So you prefer the Bill 164 regime? Is that what you're saying?
Ms Vander Laan: That may be a fairly broad statement, but certainly retaining the access we have. If that access is lost, there will be changes to the system that will not be of benefit to people who suffer from brain injury.
Ms Castrilli: Interesting.
Mr Hampton: I want to ask you some questions that are really based on this submission that came from the group that appeared a couple before you. I believe you're part of their group. They're the overall association. They're saying that acquired brain injury victims "who are not deemed catastrophic (based on the Glasgow coma scale) may not receive adequate payments, but will be eligible only for payments on a reduced scale, which will be grossly inadequate in some cases." I wonder if you agree with that statement. The general direction this proposed legislation is taking, it seems to me, will do an injustice to many of the people you work with.
Ms Vander Laan: I believe that's correct. If "catastrophic" is based on that Glasgow coma scale, then indeed there may be someone who two, three years down the road is not functioning at all, but they had a fairly high Glasgow coma scale score. They would be deemed non-catastrophic so that compensation then, as I understand the legislation, would be restricted to $72,000 or $75,000 under the rehab and attendant care. That may be totally inadequate.
It's the invisible disability in that if someone isn't able to problem-solve or if someone is not able to process information, we may have a conversation with that individual and say, "They seem to be fine; I had a conversation with that person," but for you ask them to go back to their work and deal with the complexities of their jobs or to function in their families or to find their way around the TTC might be totally impossible. The impact is much greater than what first meets the eye. I think that's a very critical piece for this particular population.
The Chair: Thank you very much, Mrs Vander Laan. We appreciate your presentation to the committee today, and the work at the Acquired Brain Injury Network.
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ESMAIL SHAHIDI BRIAN LEILA
The Chair: We now welcome Dr Shahidi. Would you identify your associate, please, for the record and begin.
Dr Esmail Shahidi: Mr Brian Leila is the manager of a centre called Target Rehabilitation Centre. He used to be an adjuster at a big insurance company. He has experience both outside and inside insurance companies and in the rehabilitation field. I thought we could use his experience to answer some of the questions you may have regarding the proposals we have prepared for you.
I am Dr Esmail Shahidi, a chiropractor registered to practise chiropractic in the province of Ontario since 1990. My practice is primarily limited to motor vehicle accidents, to the treatment of victims of motor vehicle accidents, and in the past few years I have dealt with a great number of injured people. I have been exposed to three different systems, namely, tort, Bill 68 and Bill 164.
We all know that for every action there is an equal and opposite reaction. It would appear that the current draft legislation for automobile insurance in Ontario is a direct and opposite response to Bill 164 introduced by the former NDP government on January 1, 1994. You may feel that Bill 164 is a bad piece of legislation. While I do not completely share your view, I believe that two wrongs do not make a right.
The proposed draft legislation does not address the perceived inadequacy and shortfalls in the previous legislation. Our understanding was that the major objective of the government was to control the spiralling cost of present automobile insurance policy. We have now come across reports that suggest this new legislation will actually increase the costs of auto insurance. Surely, if not for that reason alone, this draft should be further reviewed.
We have reviewed the presentations of various interest groups and made our own recommendations, of course concentrating on the areas where we have the most expertise and experience.
We would ask that the following changes be made in the proposed legislation:
(1) That wherever the term "medical" appears in the legislation it be replaced with "health care" unless the term pertains to services as specifically performed by a medical doctor.
(2) Define more clearly the differences between services provided by a physiotherapist and active rehabilitation.
(3) We suggest that the term "chiropractic treatment" be replaced with "chiropractic services" or "services provided by a chiropractor." As you well know, chiropractors are the experts in manual medicine. They are also well trained to provide physical therapy to injured persons. It should be noted that because of their expertise, chiropractors are not only treatment providers, but also work in the capacity of consultants and provide a wide range of rehabilitation services.
(4) With regard to the number of chiropractic and physiotherapy visits or weeks the insurers are required to pay in case of disapproval of the treatment plan, I suggest that subsection 42(6) be amended as follows:
"In case of the dispute with regard to payment for chiropractic services or services provided by a physiotherapist, the insurer may, at it's sole discretion, refer the insured person for an assessment by a health practitioner from the same profession whose services are being assessed, to a centre on the roster designated by the OIC. Until such time the report is received, the insurer would continue to directly pay for the treatment to the service provider."
We have dealt with several issues brought to your attention by the various interest groups and we believe our proposals are reasonable solutions to the foreseeable disputes that may arise from the way the legislation is drafted. Our proposals will insure that the insurance company has the discretionary power to immediately or subsequently refer their insured for an assessment.
Presently, our understanding of the draft legislation is that the insurance companies have no choice but to either accept the proposed treatment plan or refer the patient immediately for an assessment which is too costly and will interrupt the patient's treatment plan. This could even result in further prolongation of the patient's treatment, pain, suffering and disability, and consequently the cost of the claim.
We also believe that the person performing the assessment should have the same training as the health practitioner who has submitted the treatment plan. It is unreasonable for a chiropractor to issue a report on the necessity of a knee surgery to be performed by an orthopaedic surgeon. It is also equally unacceptable for an orthopaedic surgeon to comment on the necessity and the reasonableness of chiropractic treatments.
Our proposal will also ensure that the required services provided by the physiotherapist and chiropractor be paid for by the insurers directly to the service provider as long as the insurer agrees with the treatment plan. Please note that we are dealing with a very important and vital issue; that is, making payment for necessary and reasonable medical and/or chiropractic services. Failing to provide necessary funding for early appropriate treatment will result in further suffering of a victim of a motor vehicle accident and will prolong their disability, pain and suffering.
We have seen that even under the OMPP the injured persons, regardless of fault, were entitled to reasonable and necessary medical and chiropractic benefits. Even though the insurance companies basically had no control over their exposure to the cost of medical expenses, a survey of the chart provided by State Farm insurance company, which we have attached as appendix A to our presentation, will indicate that these costs were relatively stable from 1991 to 1994.
As of January 1994, the new no-fault system came into effect. The insurance companies effectively gained control of the medical and rehabilitation costs by being able to refer their insured after eight weeks past their motor vehicle accident or after $2,000 of medical expenses were incurred to a DAC. However, some insurers claim the size of spending on rehabilitation and medical expenses grew considerably, while others, such as a large insurer that made a presentation yesterday, admitted they were able to control their overall claim costs and limit them to a 4.8% increase.
We believe the major reasons for a spiralling medical cost by some insurers are because of misunderstanding of the legislation and inconsistent adjusting and indiscriminate use and abuse of the DAC system.
We propose that the maximum medical and rehabilitation benefit be limited to $25,000 for soft tissue injuries. In case of a dispute, the matter should be referred to a DAC for further assessments and recommendations for approval of funding for medical expenses up to a maximum of $75,000. Our proposal will allow the insurance companies to better control their reserve funds.
I direct your attention to appendix B of our presentation which we have again extracted from the State Farm insurance company's presentation on February 20, 1996. It appears that the State Farm insurance company paid $943,000 for medical reports in 1995 as compared to only $47,000 in 1991. This is an increase of 1,300%. The proposed new legislation, if not amended, will increase these costs even further.
It was our assumption that the DAC process was intended to be an impartial tool which would be used to settle disputes in such areas as treatment and disability entitlements. We predict that under the new system referring patients to the DACs will become a routine part of the claims handling process. This will result in longer waiting lists for assessment by DACs, as the insurance companies will be forced to use them routinely. This will also increase the overall cost of claim settling, in some cases, without providing any benefit to the insured.
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Mr Brian Leila: Under the proposed legislation, the insured has to submit a treatment plan before even the assessment or the treatment begins. The insurance company does not have to pay for the expenses incurred prior to the submission of the treatment plan. We believe there should be a reasonable time lapse between the patient's visit and examination by the doctor and the submission of the treatment plan to the insurers so that required diagnostic tests can be carried out and accurate results obtained. Without appropriate test and examination, a reasonable diagnosis cannot be made. The present draft legislation forces the health care provider to give a definitive treatment plan too early after the initial presentation to the treatment facility. Rushing the health care provider to produce a treatment plan without appropriate diagnostic tests would put them in a precarious position. A definitive prognosis is not usually advisable and reliable when the patient is in an acute inflammatory stage.
It has also been my experience that in reality it takes weeks and sometimes months to even obtain an adjuster's name, especially when dealing with pedestrians and passengers. While this is being sorted out, many patients will be denied treatment until the question of coverage is resolved. Some insurance companies do not accept any direct or indirect billing when there is the slightest question of coverage.
Upon reviewing a number of mediation, arbitration and court cases, one will note that the size and number of special awards against some insurance companies will prove that some of them are not just innocent bystanders. They offend and violate their own policy as much as the claimants do.
We have seen insurance companies pay large sums of money for reports produced by independent medical examiners in order to deny payments for disability and health care benefits. Some insurance companies also abuse the DAC process. These centres are supposed to be independent of any influence by the insurance companies and the patients. Over the past two years, particular DACs have become so endeared to insurance companies that they work overtime to produce reports. One particular disability DAC I am told is being booked by insurance companies for mid-1997. The reason is clear: Because the insurance companies will get their favourable reports from that particular DAC, they would prefer to wait more than one year, rather than sending the insured to the next available DAC.
I would ask the committee to amend the regulations so that the OIC could provide a list of approved assessors and centres for the purpose of determining the reasonableness and necessity of the medical and rehabilitation expenses. Additionally, income entitlement for disability benefits can be decided by the same DAC to reduce the cost of obtaining reports.
The monopoly that the DACs enjoy now should be terminated and the OIC should assign an assessor or centre on a random basis to perform the necessary examinations.
It is imperative that the DACs should be totally independent, as they must help resolve disputes over medical expenses and disability. Our proposal will ensure that the DACs will remain impartial and thus reduce cost for mediation, arbitration and court costs.
Finally, we ask the committee to carefully study the impact of changing the present legislation on the victims of motor vehicle accidents in a more detailed way so that we won't have to be back here in front of another committee in two years' time. The impact of your decision on the lives and livelihoods of thousands of residents of the province of Ontario is very great. It deserves a more detailed and careful study of the present draft legislation.
We thank you very much for providing us the opportunity to speak in front of you.
Mr Kwinter: Thank you very much. You've raised a point that many other deputants have raised, and that's the whole idea about the DACs, their efficacy, their independence, their monopolistic, in some cases, perspective.
I'd like to just ask you something. When you have an accident in an automobile, most insurance companies will send you to a centre, where they will evaluate the damage to your car and give you a slip and say, "Okay, go out and get some quotes and do it."
One of the problems that several people have raised is that these DACs are really tied, in some cases, either to an insurance company, to a chiropractor, to a doctor, to a lawyer, to some other health caregiver. What would your reaction be to having a totally independent DAC that does no treatment, does nothing, just evaluates and sends them on their way to someone who is qualified to do it?
Dr Shahidi: This is an excellent point that you have brought up. Our recommendation to the committee is that the Ontario Insurance Commission be mandated to not only oversee DACs but also implement what they are supposed to do. If an insurance company wants to send somebody for assessment, they would refer that person to the OIC and the OIC will choose a DAC at its own discretion to perform the assessment. This way, the contact between the DACs and insurance companies will become minimal and there is more chance of impartiality. Of course, we consider independent assessments as part of the dispute resolution mechanism, and insurance companies should fund the OIC for the cost of administrating assessment.
Ms Lankin: I'm interested in the point that you raise about the various caps for medical-rehab benefits and suggesting that perhaps there be three tiers, which the government did look at but there was some problem around definitions. You're suggesting that for most soft-tissue injuries there be a cap of $25,000 but that there be a process through the DAC, if there is necessity for benefits beyond that, to approve further benefits.
The point that I wanted to follow up on is that you've suggested that that would allow insurance companies to better control their reserve funds. You're actually the first group that has raised this issue, although I received a fax today from someone who is watching these hearings who has raised the question that in fact we should be looking at standardizing reserves and how they are administered and the ratios and those sorts of things, because in fact it's an area that allows for profits and/or hidden profits, but it also is an area in terms of the control of losses in the insurance industry that you'd want to know what standards and whether all companies are applying the same standards. Could you talk about that a little bit, and how it would allow insurance companies to control their reserves better?
Dr Shahidi: The insurance companies, I understand, keep a reserve fund when there is a liability. Once you bring the liability down, then they have to decrease their reserve funds. With our proposal, we understand that 90%, maybe more than 90% of the people who get injured as a result of motor vehicle accidents, would be able to receive treatments that would cost under $25,000. This way, the insurers do not have to refer these people to DACs.
DACs are very costly. There are particular DACs we know that if you were to send a patient, it would cost $5,000, $6,000, $7,000 per form. You have to know that at the present time we have medical-rehabilitation DACs and disability DACs. When you multiply that by two, it would be almost half of that $25,000.
Our proposal would ensure that people will receive adequate treatment. If there is any question by the insurance company as to the necessity or reasonableness of the treatment, it would be referred to a DAC which, the way we have proposed, will be impartial and can resolve the dispute. My suggestion is that if you take our advice to make OIC responsible for the administration of DACs, you can even make DACs binding.
Mr Sampson: Just on the last topic with respect to reserves, I think you'll find one of the difficulties with allowing certain injury categories to flip into the higher injury category, if I can put it that way, is that the actuary who does the reserve will actually do the actuarial assessment at the higher rate, in the expectation that a certain amount of injuries will flip into that category, and so you don't get around the reserving problem. That's a dilemma we dealt with when we looked at three levels.
I'm interested in your discussion on treatment plans. When is it, in your view, that treatment plans can be created? It would seem to be very difficult to have a patient start treatment without really knowing what it is you were trying to achieve as a result of the treatment, what your goalposts were, for a number of reasons, the least of which is to make sure that the injured person knows where he or she is going to get as a result of the treatment.
Dr Shahidi: Under the proposed legislation, basically there is no time for us to do a complete examination, assess the patient, perform the necessary tests and make a diagnosis and come up with a reliable prognosis. My personal experience tells me that we need at least two to four weeks to come to a reliable prognosis when we make a treatment plan. The treatment plan should not be open-ended, and there should be a cost analysis done on each treatment plan. In the acute phase, it's very difficult, a few hours after an accident, to come up with a definitive treatment plan.
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Mr Sampson: But are you treating the patient within that four-week time frame?
Dr Shahidi: Yes, of course.
Mr Sampson: What are you treating them for, if you're treating them?
Dr Shahidi: The patient initially is in an acute inflammatory stage. Our goal is to limit the inflammatory stage and try to get the patient as mobile and as active as he can be. But we have to also know that there are counterindications to our active rehabilitation or other forms of treatment, or diagnostic tests may be required.
Under the present plan, we have to immediately produce a treatment plan and jump on the fax machine and fax it to the insurance company to get approval. In most cases, we don't even know if there is an insurance company. Sometimes it takes days or weeks for people to inform their insurance companies they have been in an accident, or they get the symptoms of the motor vehicle accident, the injuries, and the insurance company sends them forms for accident benefits and opens up a file and assigns an adjuster to it. So the way this has been proposed is unworkable.
The Chair: Dr Shahidi, Mr Leila, thank you very much for your presentation to the committee today.
Ms Lankin: Mr Chair, could I just table a quick question? This flows from the fax that was sent to me, and I will readily admit that I do not understand the process of reserves, other than just in a sort of a broad intellectual understanding; I don't understand the technical detail of how that works.
This person sets out a request that the committee look at the standardization of the reserving system for all insurance companies so that the system can be monitored prior to rate increases being granted to companies. It's suggested there's presently no set standard and that company reserves, for example, on medical are 10 to 15 times their actual number, which he argues results in hidden profits from the return on investment. He makes suggestions that we should be looking at certain rules around reserves when they're linked to restrictive writing or cancellation of contracts, that reserves should be removed when the file is closed, not 12 months after.
I don't know the details around all of this, but perhaps this is an area, Mr Sampson, that we could ask legislative research to look into and to inform us through the Ontario Insurance Commission whether this is a reasonable way for us to proceed or an issue for us to look at.
The Chair: If there's no discussion, we'll ask Andrew to come up with something in that area.
Mr Wettlaufer: It may be very difficult to obtain standardization of reserving, because everyone's injury is different and there is a great deal of discretion on the part of the medical-rehab specialist, the insurance adjuster, the case manager, as we've heard. Every individual claim is different and every reserve is different. But we can approach the Ontario Insurance Commission.
The Chair: Thank you very much.
RON GILLIS
The Chair: It is now our pleasure to welcome Mr Ron Gillis to the committee.
Mr Ron Gillis: Thank you very much. I'm very happy to be here, and I want to thank the committee for allowing me the opportunity to appear. My name's Ron Gillis. Of course, I'm an insurance broker in Etobicoke. I've been selling automobile insurance in Ontario since August 1982, both as an agent and as a broker. I am considered a small broker, and I employ on an ongoing basis two to three people in various capacities in our firm.
Much of the fun has gone out of my business since the introduction of Bill 164: rising premiums, inflexible markets, unhappy clients and financially struggling companies which historically have been one of the backbones of our country. I am faced with fraudulent claims, suspicious companies and an unsympathetic public. Much of the goodwill that I have built up over the past years through team sponsorships, community involvement and charitable work, which is how I generate my business, has been decimated by a clientele that is incensed that there is little value for them in the current auto insurance product as it sits.
My role as a broker has changed significantly. I never envisioned myself being an advocate appearing before a government committee. The role of the property and casualty industry, of course, has also changed. They are now seen as providers of life insurance, death benefits and disability benefits, and not as risk insurers. The role of government has effectively been altered, from the introduction of Bill 68 onwards, from a passive player to an active stakeholder. The consuming public have little regard for the professionalism of our industry. Their role has been more militant and more defiant. We take the statistic that approximately 35% of people driving in Metro Toronto today are driving without insurance or are underinsured.
I would like to take this opportunity to applaud the work of Mr Sampson and ask that the work that has been done in coming up with this legislation be given serious consideration as there is overwhelming support for auto change by us, the distributors of the product. I would encourage the adaptation of the rules and strict enforcement by the law enforcement agencies of those who cannot produce satisfactory evidence of insurance. One of the things that we are faced with constantly is a number of people coming into our office, wasting our time, getting a certificate that they can produce to a police officer. There has to be given serious consideration for not having vehicle registration and vehicle insurance, and the fines have to be appropriate because there are repeat offenders out there. The courts have held that the evidence of that pink certificate is evidence of insurance, and hence it lends itself to fraudulent claims.
Two other points and I won't take any more of the committee's time: The option to purchase higher limits is an excellent idea. The product itself was not seen as a provider of life insurance; when somebody currently dies in an automobile accident, they are given $50,000. The death benefit should be minimal, as many individuals have some form of life insurance today, either through their employers, their associations or individually held plans. There is a product there that makes up for what the auto product is currently offering.
In summary, I would like to address four points. It is critical that this legislation clamp down on insurance fraud. Without a question, this is a major, major problem in our industry right now. Reducing benefits will create other opportunities for other stakeholders in the offering and delivery of the product; that goes without saying. We applaud the reintroduction of tort. We feel it will make people more responsible in a system that historically has run well. It will also provide many opportunities and free up this government to tackle more serious problems that are facing our province. We support, as a member of the IBAO -- and I can't speak for the entire industry but I can speak for myself and a number of my colleagues -- any changes that will bring accessibility and affordability, and bring back the fun in our business.
The Chair: Thank you, Mr Gillis. Would you have time for a round of questions?
Mr Gillis: By all means.
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Mr Hampton: I'd like to get your reaction to the points that have been raised by a couple of other organizations that have been here. For example, the Insurance Bureau of Canada is basically saying that this package will result in annual premium increases of 8%. Zurich Insurance is saying that in their estimate -- and they are, I gather, the second-largest insurer in the province -- it will result in annual increases of 12%. What do you think that will do to your business and your dealings with your clients if that's the kind of rate increases you'll be telling them about when they come in to buy auto insurance?
Mr Gillis: Let me start off by telling you that the last time I had an insurance claim was 1979, and the last time I had a traffic conviction was May 18, 1982. My insurance went up 27% last year. I have not claimed in all those years.
The product itself is priced way over. Those increases that are cited by the IBC are probably predicated on the fact that we have not been able to control the costs -- the costs of fraudulent claims, the costs of body shops, the costs of lawyers' contingency fees etc. If we are able to control those costs, I think the increases will be moderate. I think that they're probably erring on the high side. My feeling is that Zurich has stepped apart. They have indicated that they're in favour of the other system. The majority of the property and casualty industry are in favour of the reintroduction of tort -- and the modification of the plans; it goes without saying.
Mr Sampson: Thank you for your presentation and coming to speak to us today. I must admit, a good friend of mine who lives in my home town and is in the industry, his mood has gone down during the period of Bill 164 and he's looking forward to a better business climate as well. I hope that this product will do that. One of the things that we tried to do is create a balance between the tort and no-fault to stabilize the price. The numbers that are coming from IBC I have already stated aren't acceptable, don't represent stability on our part. We clearly need to work on some of the control items you talked about to make sure that they are in the plan so that people can get an affordable system and a justifiable system.
One of the concerns we have heard from the brokerage community, though, is that the top-up provisions that we're suggesting may put an undue burden on the brokerage system, the very important distribution system of this product, as it relates to potential liability exposure. Can you comment on that, and how at least you feel in your own shop about having the opportunity to sell top-up insurance to customize for your clients?
Mr Gillis: If I could use what we currently have available now, which is the OEF 45 endorsement: We have approximately $1.5 million of business; I have yet to sell one of those. We have insured people from the Blue Jays right down to single welfare mothers; we have never sold that product. People do not want to pay any more for automobile insurance. That option should be there, but it should not be built into the product. It should be up to the discretion of the provider, distributor, and up to the client to make that choice, because there are layers and layers of coverage built throughout the system. All you have to do is take a look at your own individual portfolios to find where there are -- there's creditor insurance, there's mortgage insurance, there's disability insurance, there are individually held plans -- overlaps, and the product should not be designed in that way to accommodate a statistically insignificant amount of people in the province who require the full enchilada, as it were. I am not totally familiar with the top-up provisions, but I can comment on the OEF 45.
Mr Wettlaufer: What do you think would be a good minimum fine for driving without insurance -- $5,000?
Mr Gillis: I believe, for a first-time offender, if they are not able to produce within the stipulated period of time -- and I'm not talking about a back-dated but an actual valid policy -- within the 48 hours, they should have a $1,000 fine immediately. There should be no areas whatsoever. The law is quite clear; vehicle registration and proof of insurance have to be carried in the automobile at all times. It belongs to the automobile; we're insuring the automobile; it is the responsibility of the individual with the care, custody and control of that car to make sure that those documents are there. So $1,000. It may require some public education, because within the last four or five years we've modified the product so much, people frankly don't know what they're covered for, what fault means, what no-fault means. It's a real quagmire out there, and we're at a loss, especially confronted with the fact that we may have to turn around and explain to the public again the changes that are coming down the road.
Ms Castrilli: Mr Gillis, thank you for being here today. We've had a number of presenters talk about the critical problem of fraud and how this is impacting on the cost to consumers. We had one presentation that estimated fraud at about 33% of all claims. I wonder if that meets with your experience in the field and I wonder too what suggestions you would have for changes to the legislation to attack the problem of fraud.
Mr Gillis: The area of fraud is one where, first of all, there is no negotiation with risks. The "all comers" has basically indicated we have to insure and we have to provide. We are in business and that's what we want, but we would like to be able to direct our business where it will have minimal impact. We're not able to do that.
With fraud, again, it's a character assessment. The man sits at the other side of my desk. He's writing a cheque. I have to assume his cheque is going to be good and that the document he has signed is correct. The fact is, many people misrepresent; they lie or they have oversights as to whether they were actually at fault in an accident, or whether there was actually a $50,000 payout or a $5,000 payout. That information is not often available, but there are individuals -- and part of it is organized crime as well, where there are groups operating in collusion with -- I won't say physicians, but people in the medical field, people in the legal field, who have helped coerce and bring certain individuals into an area where they've been able to claim 14 and 15 times. These people do exist. I have a situation right now where I've had people who, for a $700 bumper loss, have claimed on me $43,000, and we're still climbing. What do I do? I know this is wrong. I know this person is working and yet the benefits keep going. Why? Because if they don't, the carrier is penalized significantly.
There are other alternatives, but to control fraud there has to be tighter legislation, tighter enforcement by the police. Frankly, the police have taken the attitude, especially at collision reporting centres, "Okay, the insurance is going to take care of it." It's a low-priority item. They've got 15 calls backed up. They won't respond to an automobile accident today; it's just not in their mandate. You have to go to a collision reporting centre. Many people will just drive off. We had a case just recently where one of my good friends was cut off in the middle of the night, completely left. The police officer came, the plate was given. Four weeks later, there is no tracing of the plate, no copy of the police report. We've had to pay out $17,000 for the car, and my friend has incurred some injuries, but he's too proud to take any sort of benefit and he continues to work.
The Chair: Mr Gillis, we thank you very much for presenting to the committee and appreciate your time.
CICIL JAIPAUL
The Chair: Welcome to the committee, Mr Jaipaul.
Mr Cicil Jaipaul: Mr Chairman, ladies and gentlemen, for several years now I've been teaching insurance on a part-time basis. I taught automobile insurance under three different systems. The students in my classes are made up of claims adjusters, underwriters, brokers, managers and others. They go on to write the examinations leading up to the associateship of the Insurance Institute of Canada.
Often in a classroom, they would comment on various insurance matters. Automobile insurance is perhaps the most popular and relevant topic that is discussed. I must say at the onset that I restrict my presentation to classroom discussions. Therefore, I cannot provide any information that may have been obtained outside of the classroom. My remarks this afternoon represent a few of the concerns that were raised in my classes.
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First, with respect to the definition of "spouse," the bill changes this definition, but I feel that it does not take into consideration some other situations. I will deal with two of those situations that were reported by Hughes, Amys in their publication, the OIC Note.
In one instance, the parents of an injured claimant had ceased cohabiting seven months before the accident. The separation ended in bankruptcy for both parents. For reasons related to the bankruptcy, they declared that they were no longer spouses. They married a year after the accident. In this case, it was decided that they were spouses and were entitled to benefits.
In another case, two years and five months before the death of the insured, he lived with a claimant. The claimant was applying for death benefit. The Ministry of Community and Social Services frequently required the claimant to certify her marital status. She'd always shown that she was single. In this case, it was decided that the claimant was or constituted a spouse and was entitled to a minimum of $50,000 death benefit.
I would suggest that the new legislation should clarify these situations and ensure that issues like these are addressed.
Rehabilitation benefits is another area. Concerns have been raised that there are no standards or certification required for some of the providers of rehabilitation benefits. The legislation should provide for some establishment of a committee to look into some sort of licensing of accident benefit rehabilitation consultants.
Death benefits. Section 23 of the proposed regulations deals with death benefits. Our society has several single parents who do not have a spouse. The proposed legislation does not allow for the payment of the optional death benefits. Even though it may have been purchased, it does not allow for the payment of optional death benefits to the surviving dependents. This is unfair.
Funeral expenses. This is dealt with in section 22 of the proposed regulations. Funeral expenses are not clearly defined in the bill. Sometimes when one person dies, a claim is made for double cemetery plots, monuments for two, food for the wake, the services of a limousine. The legislation should, I think, be consistent with the definitions in the Funeral Directors and Establishments Act.
The next point I'd like to look at is average weekly income. It would be easier if the legislation set out the calculation of average weekly income, and this should be based on the actual number of weeks worked before the accident. It is felt that this would validate the current practice in the industry. The proposed legislation implies that the average is over 52 weeks and not the actual period worked if that person had worked for less than 52 weeks.
Housekeeping and home maintenance expense. The draft regulations allow for a cap of $100 per week. This is an excellent change.
Damage to clothing is dealt with in section 30 of the regulations. Claim representatives are concerned that they are required to pay for very expensive jewellery, watches and other items lost in motorcycle and automobile accidents. The bill should set a limit of $1,000 payable under this section.
Education expenses. Education expenses should be extended to include tuition, books, transportation, school supplies and room and board. The bill should set a maximum benefit of $1,000 per semester.
Exclusions under the regulations. These are dealt with in the proposed regulations in section 33. Under the present system, if a person purchases the optional coverage under the collision or the damage section of the policy and their vehicle is involved in an accident, in some instances the insurer may be able to deny coverage. The insurer will not pay for loss or damage to the automobile if the insured was unable to maintain proper control of the automobile because they were driving under the influence of intoxicating substances. This is set out in section 7.2(2) of the current policy. However, an insurer will be able to deny weekly no-fault benefits only if there was a conviction under the Criminal Code for a similar offence.
To show the seriousness of this matter -- driving while under the influence of intoxicating substances -- the standard for no-fault benefits should be the same as the standard set for claims under the physical damage section of the automobile policy; that is, there should not necessarily be a conviction.
Notice to the insured: This is dealt with in section 34 of the proposed regulation. The draft regulation provides that if the insured person, without reasonable excuse, fails to notify the insurer within 30 days of their right to file a claim for accident benefits, the insurer may delay their decision on entitlement for 45 days after they receive the application.
In another section, it states that if the insurer determines that a person is not entitled or no longer entitled to receive benefits, the insurer must give the claimant 14 days' notice. The notice by the insurer must also consider the date of entitlement, not necessarily the date when the application was received. This will take into consideration those cases where the claimant, without reasonable excuse, reported the claim outside that 30-day period.
Repayments to the insurer: this is dealt with under section 52 of the proposed regulations. Sometimes payments of benefits are made and later it is discovered that there was misrepresentation or fraud. In these cases, you can only deduct as repayment 20% of the amount of weekly benefits from each payment of the ongoing weekly income benefit. The 20% rule should not apply where the overpayment was due to misrepresentation or fraud.
Application for benefits: Claim representatives are prevented from asking certain questions that would help them in their investigation to decide whether a person's entitled to a benefit or whether the person might be engaged in double-dipping. In one case that was reported by Hughes, Amys in their publication, the OIC Note, in an arbitration decision, the claimant was receiving social assistance and lived in subsidized housing. This claimant was determined to be a spouse for death benefit and claimed a minimum of $50,000, despite her misrepresentation to the Ministry of Community and Social Services. The bill should allow for an approved application for benefits form, where the claimant, resident in Canada, must show whether they are legally permitted to work in Canada and whether they are receiving social services benefits.
Paraprofessionals are often used in handling accident benefits claims, so there are concerns about the increasing use of independent paraprofessionals in handling these no-fault claims. Commenting on this, York University Professor H.W. Arthurs, in his report to the former minister responsible for insurance, the report entitled A Review of Advocacy and Dispute Resolution in Ontario: Automobile Insurance Systems, wrote, "As a matter of practicality, some insurers, lawyers and other informed participant observers complain about the ethics, price and competence of paralegals."
Paralegals employed by law firms are subject to law society regulation. Independent paralegals are not regulated. Professor Arthurs also stated that, "It does not follow that claimants should simply be abandoned to the unregulated behaviour of whichever lawyers or paralegals happen to venture into the area of automobile accident benefits."
The bill should include provisions for the licensing of independent paralegals dealing with accident benefit claims.
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Two final points I'd like to mention. These are miscellaneous points under the proposed regulations dealing with non-residents.
The bill should provide that persons who are not resident in Ontario should receive benefits only to the extent that they are not at fault in the accident; more so, if they are from a province or a state that does not have the sort of reciprocal arrangements where Ontario residents would get full benefits.
The other one is with respect to the Insurance Crime Prevention Bureau. To control claims costs and to eliminate abuses of the system, the legislation should mandate reporting by all insurers to the Insurance Crime Prevention Bureau. The legislation should also allow for fines for non-compliance with any aspect of the legislation.
This bill makes interesting changes to the current automobile benefits system. It strikes a good balance between the benefits to the claimants and the administration of those benefits. My objective was to bring to the committee a few of the concerns of a number of people I came into contact with while teaching at Metro community colleges. I sincerely hope that you will take them into consideration during your deliberations on this bill. I thank you for giving me the opportunity to present these views.
Mr Sampson: I can understand why you were in the front of the class and perhaps not in the back of the class in your classroom.
Mr Jaipaul: Thank you.
Mr Sampson: You've touched on a number of very important points. I just want some clarification, if I can. The average weekly incomes recommendation you have is to calculate that over the period employed over the last 52 weeks as opposed to the 52 weeks from the date of the accident? Maybe you can just clarify that for me. I didn't quite get it.
Mr Jaipaul: The practice is if a person had worked 26 weeks in the last 52 weeks, Their average would have been the average of those 26 weeks. That is the practice. What I'm hearing is that they would like to see that practice written in the legislation rather than as it appeared initially, where you divide by 52 weeks regardless of how many weeks you had worked.
Mr Sampson: We had one recommendation, if I can recall it correctly, that we try to gear that to the last taxation year. I think the follow-through from that argument was, you at least will have a document, ie, the last tax form, to verify that income level, which, as you may or may not know, is somewhat of a difficulty in some of the arbitration cases that are going through the OIC. Do you take the tax form or do you take what they're saying their income is? Do you have any comment as to whether or not we should take a look at tax years as opposed to actual employment years -- or sorry, the time from the accident back?
Mr Jaipaul: I would think it should have been the time that they worked, not necessarily the tax year.
Mr Sampson: Okay.
Mr Kwinter: Thank you very much, Mr Jaipaul, for a very thorough evaluation of the draft legislation. Would you clarify something for me? Under contract law, and an insurance policy is a contract, if there is misrepresentation or fraud, it's void. You cannot benefit from something that has proven to be fraudulent or misrepresented, yet you sort of imply that there is one provision, that if there was fraud, you'd still be eligible to up to 20% on that basis. Could you just clarify that for me?
Mr Jaipaul: What I was saying is that you're still entitled to some benefits. In some instances, the benefit might have been paid and later on the misrepresentation or fraud is determined, because there are time frames within which the benefit must be paid. As the investigation continues, it might be determined that there was a misrepresentation or fraud, by which time you might have paid several weekly benefits. When you set out to recover those benefits, the recovery is limited to 20% of whatever the ongoing benefit is. You cannot deduct more than 20% of the ongoing benefits.
Mr Kwinter: Notwithstanding that it was fraudulently received?
Mr Jaipaul: That's right.
Mr Kwinter: I think you're right; that should be looked into.
Mr Hampton: The general tenor of your presentation is that insurance benefits need to be ratcheted down. Is that a fair conclusion?
Mr Jaipaul: No, I don't think so. I think the benefits that are set out in the proposed legislation, from what I'm hearing, are fair benefits, and if those benefits somehow, and I don't know how, could result in a reduction of insurance costs, that goes outside of the classroom. Perhaps from a personal point of view that would be favourable.
Mr Hampton: What I hear you saying, and correct me if I'm wrong, I'm just going on what I've been reading in the media reports and some of the other submissions that I have read here, but the fact of the matter is that the benefits will be reduced by this legislation. Do you agree with that?
Mr Jaipaul: Yes, I do.
Mr Hampton: What I have difficulty understanding is, you're going to reduce benefits -- and in some cases the reduction in benefits is significant -- and yet the Insurance Bureau of Canada says that the annual cost of insurance will go up by, as they estimate it, 7% to 8%. Zurich Insurance says closer to, I think, 12%; Co-operators agrees with Zurich. If you're in effect reducing the benefits for accident victims, and that should somehow reduce the cost of this, how do you get an ongoing to 7% to 12% or 13% cost increase every year in premiums?
Mr Jaipaul: One thing I'm glad of that in my classes I'm not required to teach how rates are calculated. I never understand that. I only understand what benefits are available and I can only tell you what students think about those benefits.
The Chair: Thank you, Mr Jaipaul, for sharing your information and presenting to the committee.
ACCIDENT RECOVERY PHYSIOTHERAPY
The Chair: We now have Accident Recovery Physiotherapy. Welcome to the committee -- is it Mr Benyacar?
Mr Michael Benyacar: Benyacar, yes, and my lovely wife, Sharee.
The Chair: Welcome to the committee.
Ms Sharee Mandel-Benyacar: Thank you.
Mr Benyacar: Sharee and I have been the owners of two private physiotherapy practices for the last 10 years, and we're glad we could be here today to contribute any ideas for this committee. Our approach, though, because we weren't able to obtain a copy of the full legislation to see the details -- it wasn't available in the three days that we have had to prepare for this, so we took a more holistic approach and tried to look at the actual intent of the legislation. We are going to make some submissions based on that intent rather than on many of the details.
The first submission we want to make is in regard to statements by the insurance industry itself that half of all auto insurance premium increases are due to the soaring costs and profits in the auto industry and that the committee is really only addressing half the problems in regard to runaway auto insurance premiums. It's our suggestion that the economic sector of the auto industry be investigated for excessive profits, fraud and perhaps be regulated as the medical community and the legal community are. We believe that dealing with just half of the problem at best can only come up with half the solution.
Additionally, we submit that in the future, when the record-breaking profits of the banking industry get involved in the insurance industry too, that will change the whole landscape of the insurance industry. That should be looked at too in order to maintain long-term stability in the insurance industry as well and not to be neglected.
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The second point we want to raise is that we feel that entrepreneurial physical therapists are not responsible for the rising medical claims. Rather we believe that the Ontario College of Physicians and Surgeons' removal of their regulatory prohibition against physicians owning rehabilitation clinics, combined with the previous administration's legislation of capping of physicians' salaries, was a clear invitation to exploit other means for recouping losses.
This has resulted in a marked increase in physician- and some lawyer-owned therapy clinics and is characterized by an act called patient streaming, whereby patients are first queried as to whether they have insurance to cover therapy before being assigned preferably to the physician's private clinic over their OHIP clinic. We believe this easy and unethical exploitation of insurance companies by physicians is a primary reason for soaring medical claims. We submit that if the proposed legislation is intended to halt the exploitation of medical insurance claims, then the practice of patient streaming should be halted immediately. Another practical option would be that physicians would be required to inform both patients and the insurer of their financial interest in any rehabilitation clinic they happen to be participating in.
Thirdly, we believe that insurance companies already have more than enough authority to refuse injury claims. Refusal of claims without evidence or just cause only delays a patient's opportunity to return to pre-accident status, and we submit that the proposed legislation should be amended so as to state that any refusal for physical therapy should be implemented only when it has been proven that it is unwarranted, and not prior to that.
Fourthly, before we begin treating any patients in our clinic and in most private practices that we're aware of, approval is always granted by an insurance adjuster and is requested. However, that approval will only be given verbally. The reason for keeping it only verbal and refusing to make the commitment in writing is that often in the future such decisions are reversed by insurance adjusters. The big problem with this is that it adds additional emotional and financial stress to the patients and to the physiotherapy clinic and most often has to end up and be settled in court. We would like to submit that the insurance industry have to approve all assessments and treatment plans in writing so that they cannot arbitrarily reverse their decision without just cause in the future.
Fifthly, although the Regulated Health Professions Act was amended in December 1993, placing physiotherapists on par with chiropractors and physicians in certifying, diagnosing and treating disabilities, the government of Ontario refuses to grant new OHIP licences to physiotherapists. In fact no new OHIP licences have been granted to any physiotherapist in Ontario since about 1967. Existing OHIP licences for physiotherapists typically sell for $500,000 and greatly contribute to the capital costs that must be recovered by an OHIP clinic.
We believe that this discrimination is grossly unfair and goes against the insurance industry's desire of shortening the recovery time of injury victims by forcing OHIP clinics to lower quality of service for economic survival. You may not see the direct relationship between the legislation and an OHIP clinic. However, if a patient takes longer to return to pre-accident status, that is more time he's off work and collecting benefits. The sooner they can be returned to pre-accident status the better it is. So we submit that it is in the best interests of all parties to allow all existing physiotherapy clinics to be able to apply for an OHIP licence.
Sixth, in addition to the Regulated Health Professions Act, the statutory accident benefits schedule designates physical therapists as a profession that has authority to certify disability. Insurance adjusters simply refuse to accept this fact and insist on copies of physician's referrals and often dispute the assessments and treatment plans of the physical therapists. This naïve and insulting act is usually accompanied by physical assessments and suggested therapy treatments by the insurance adjusters themselves. We believe that these medically untrained people lack the scope and training to make such important decisions.
In the majority of cases physicians simply direct a physiotherapist to assess and treat. Therefore, the request for duplication of assessment places unnecessary delays in the patient's path to recovery and additional costs to OHIP. We submit that amendments should be made that assessment by physiotherapists be accepted by the insurer and to allow only those who have been medically trained to make assessments and treatment plans. Additionally, medically untrained insurance adjusters should be completely disallowed from making medical assessments and treatment recommendations, limiting their authority to only requesting independent medical opinions.
I want to get on to the provision of benefits here, the concept of Canadian law being that we're all innocent until proven guilty. The proposed change of denying benefits for six months to unemployed people who pay the same premium is, I believe, unjust. This proposed change insinuates that poor or unemployed people are automatically less honest and must be treated accordingly prior to any deed. We believe that this paranoia of abuse by the unemployed is morally unjust and unwarranted. We submit that this amendment should be dismissed or at the very least be modified to allow lower premiums for unemployed people, since they would otherwise get no or very little benefits.
Two very quick points and then I'm finished. This point is a little bit outside the legislation, but I feel it's an interesting one I want to bring up. Many of the insurance companies operating in Ontario are American subsidiaries. In the last two years American insurance companies have had record-breaking insurance claims in excess of $20 billion due to the LA earthquake, Hurricane Andrew and the Mississippi flood. We submit that this committee investigate the possibility that American subsidiaries may be raising insurance premiums in Canada to subsidize American insurance claims and that Canadian insurance companies, no longer fearing competition from their American counterparts, are jumping on the bandwagon towards higher premiums.
Lastly, if the government of Ontario is serious about lowering auto insurance premiums and lowering taxes, as it has repeatedly stated, we submit that the removal of the 5% sales tax on auto insurance premiums implemented by the previous administration be removed.
That concludes the issues that I want to bring up here with you today. I thank you very much for taking the time to listen.
Mr Kwinter: Thank you very much for your presentation. I'd just like to get clarification on one issue and then I'd like to discuss another one with you. You talk about that physiotherapists being covered under the Regulated Health Professions Act., yet you say that there hasn't been a physiotherapist licence since 1967. You really mean a physiotherapist facility as opposed to the physiotherapists themselves. I assume that you practise physiotherapy as a licensed practitioner.
Mr Benyacar: Yes.
Mr Kwinter: I happen to know something about this particular issue. There are areas that are designated for that particular physiotherapy centre and you can't open another one within that area and they haven't given a licence since 1967. It's just like a taxicab licence. The price has gone up astronomically because you can only transfer the licence, you can't get a new one. Is that what you mean?
Mr Benyacar: That's partly it. However, what I'm trying to make you understand here is that it indirectly affects the length of time that most patients take to recover by forcing these clinics to have to lower the quality of service for economic survival. The best interests for the patients and the insurance industry is to get people back to pre-accident status as quickly as possible. Withholding OHIP licences just makes the cost of owning and running an OHIP practice very expensive. Most people are in the business 10 years, 20 years, 30 years, and these licences have to be sold for enormous sums of money and those capital costs have to get buried into the cost of the services.
Mr Kwinter: I'm also interested in your point about the reverse onus, that it's up to I guess the insurance company, or it could be the DAC, to determine that. In other words, they have to prove that you don't need the treatment as opposed to the other way around where you, as the physiotherapist, have to prove that they do need the treatment.
Mr Benyacar: Correct.
Mr Kwinter: It would seem to me that on the one hand you have no hesitation and say that "this easy and unethical exploitation of insurance companies by physicians is a primary" source of "soaring medical claims." What is to prohibit that from any health service provider if they don't have to show the cause for it, but as long as they say that it's up to the insurance company to prove that they don't need it as opposed to the health care provider to prove that they do need it. I think you're going to have a wide-open, open-ended system with --
Mr Benyacar: What I'm trying to say is the rehabilitation shouldn't stop, shouldn't be interrupted while that dispute is going on. The insurance adjuster should have the right to seek independent opinions and make a decision based on that, not suspend therapy until that opinion comes to fruition.
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Mr Hampton: Just a quick comment on your last point, the removal of the 5% sales tax on auto insurance premiums: I don't want to disappoint you, but I think if you follow the government's negotiations with the federal government regarding the GST, we may well soon see 12% sales tax rates applied to auto insurance and many other things in the province. While I understand what you're getting at there, I think you're probably going to see the sales tax in auto insurance go up, not down.
Could I ask you about the patient streaming?
Mr Benyacar: Yes.
Mr Hampton: While I haven't sat on this committee all week, I have watched some of the hearings and I've done some constituency work in the field of auto insurance claims. It does seem to me that we are seeing an abundance of clinics, and the ownership of those clinics is open to interpretation and dispute. When you see patient streaming, what are you seeing? Can you give us a more lengthy description than you've set out here?
Mr Benyacar: Basically, the cause of it is physicians wanting to increase their income. They open up two clinics, an OHIP version and a private practice version which they can bill to insurance companies. Where they send their patients is dependent upon --
Mr Hampton: Who's paying.
Mr Benyacar: -- who's paying and who can pay them more. That's exactly where that patient will go. That's what patient streaming is.
Mr Hampton: So if the patient were injured in an automobile accident and they're receiving auto insurance benefits, send them to the private clinic.
Mr Benyacar: Right, which he has a financial interest in and that's where he would make more money from.
Mr Hampton: We saw some evidence earlier that insurance companies have over the last four or five years started to request an unusual number of medical reports, and if you look at the rate of increase of their request of medical reports, it has accelerated very rapidly. Has that been you experience?
Mr Benyacar: We actually implemented our own program where we send them a document that we request they sign. We provide them with regular medical reports, weekly, biweekly, bimonthly or monthly. They sign it and send it back to us and we automatically send reports to insurance companies at the frequency they request. But we ask them to request it in our particular clinics.
Mr Hampton: Is there a charge for each of those reports?
Mr Benyacar: Yes, because it takes time to write them up. They decide how often they want to have them.
Mrs Marland: Thank you very much, Mr Benyacar. I want to say at the outset that I appreciate, as a member of this committee, your forthright and very open presentation because I feel that from your experience and your perspective you have been very direct with us. We need that kind of submission and that kind of information, because we in turn then can ask other people about it with that knowledge.
I too want to spend a little bit more time on the area of patient streaming because, frankly, I wasn't aware of it until this week. I'm not in the clinic business myself and I'm not in the insurance business either, and fortunately I haven't been a motor vehicle accident victim.
Just to play the devil's advocate with you, is part of the problem for a physician that they need to get that treatment as quickly as possible for that motor vehicle accident victim and the waiting time is a lot longer in the OHIP clinics because we have so few? I don't know why we haven't resolved that problem, to tell you the truth, because I always think it's abominable that if you really want to get physiotherapy treatment as quickly as possible, you have to go to the private clinics because you wait forever at the public ones. Is that part of the element of the problem here?
Mr Benyacar: No, because if the patient needs immediate physiotherapy and they have coverage for private physiotherapy, they can receive it immediately at many private practices. So the doctor isn't doing it just to provide immediate service. As for the OHIP clinics, you have to understand the logistics. It's $12.20 per patient per visit no matter how long the treatment is or what the treatment is. It doesn't take much math ability to figure out you have to push a minimum of 100 people a day through the clinic to be economically viable. Because there are so few OHIP clinics out there, they're just backlogged because of the huge volume. There need to be some more OHIP clinics.
Mrs Marland: What do you suggest is the solution? I've agreed for a long time there should be more OHIP clinics, but what is the solution between a private insurance company and the doctor who has the private clinic? Is there something the government should do?
Mr Benyacar: Yes.
Mrs Marland: Should the government be saying that doctors shouldn't own private clinics?
Mr Benyacar: That's right.
Mrs Marland: Or shouldn't be able to refer to clinics that they own or their friends own?
Mr Benyacar: We understand everyone has their profession. The doctors have the medical profession, physiotherapy has the therapy profession, lawyers have the legal profession, and everybody seems to be invading our profession -- doctors and lawyers and other entrepreneurs. It's getting to the point where everyone's just doing whatever they can to slice up what they believe is a huge, lucrative field, and it's becoming the opposite because there are so many players involved.
Mrs Marland: Do you think patients will continue treatment after they were recovered? When you talk about it being the primary reason for soaring medical claims, I can see a possible exploitation of the patient, but do you think a patient is going to continue going for treatments after they've recovered in their own terms of movement and comfort?
Mr Benyacar: I don't quite understand what you're trying to lead to.
Mrs Marland: You're saying how unethical you think the streaming by physicians of patients to their own clinics is, and I agree with that, but you're also saying that's the primary reason for soaring medical claims. But I'm also asking you, as a professional, whether there are practitioners in medicine or physiotherapy who would encourage patients to continue coming to them, because the insurance company is paying for it, after they need the treatment.
Mr Benyacar: I believe so. I personally have been approached by three physicians who want to go into partnership in such clinics and I declined. Secondly, you have to understand there is a marked difference in the quality of service between an OHIP clinic and a private practice. Since we get paid more per patient, we can spend a lot more time with them, develop a relationship with them and see to it that they follow their home program. They're more apt to respond to that because they have that one-on-one relationship with a physiotherapist they see for an hour every day rather than being left in a room on some machine for 10 minutes and "Good day."
The Chair: Thank you very much. We appreciate your presentation to us today.
1810
PAT MCPOLIN
The Chair: Mr McPolin, welcome to the committee.
Mr Pat McPolin: I would like to take this time to thank the committee for giving me an opportunity to speak today. I believe it is worth noting that approximately one year ago, I called then-Minister Laughren's office about this issue. His assistant in charge of insurance refused to return my calls.
There is no one in this room with a better driving record than I have. In 18 years of driving, I've not had an accident. I've not had a single claim, not even a broken windshield. I have all my demerit points. My sin, however, is I did not have insurance when I did not have a car. From my understanding, there are two types of coverage lapses. One is not having insurance for at least 12 months in the last 24. This is automatically sent to Facility. Of note, three weeks ago Mr Sampson's assistant told me that the draft legislation would address this, but apparently it does not.
The second type of lapse is not having insurance for 30 days or more, but having insurance for 12 months in the last 24. This is the category I fell into. During the fall of 1994, my vehicle succumbed to its 485,000 kilometres. As the deal for my replacement vehicle fell through, I began shopping for another vehicle. When I found this car, I went to a State Farm broker who informed me that, due to my lapse in coverage, my six-star driving status was now no star. In disbelief I went to three different brokers from three different insurance companies who all told me the same thing. In fact, he told me I would get the best deal from my previous insurer, State Farm.
On the first page of my handout, you'll find a quote for six months of insurance from another State Farm broker, this one offering me one-star status. That quote is for pleasure driving and the right includes business use. Now look at this. This is an eight-year-old car with no collision, only a half-million dollar liability, which most insurers would consider underinsured. For business use, this would cost me in excess of $2,000 per year. The brokers told me that had I left insurance on my car, even though it did not exist, I would have retained my six-star status.
In September 1995, I prepared a brief synopsis of my situation and requested a logical explanation. I sent this letter to the Ontario Insurance Commission; John Gerretsen, MPP for Kingston and The Islands; and State Farm head office. The Ontario Insurance Commission called me within one week. John Gerretsen notified me that my concerns were being forwarded to the Minister of Finance, Ernie Eves. State Farm, to date, has not responded. That is five and a half months and counting.
Pages 2 and 3 of my handout are the response from Ernie Eves, received January 9, 1996. I would like to draw your attention to the following:
Paragraph 2 begins, "It is insurance industry practice to rate an individual, with a considerable lapse in automobile insurance coverage, the same as an inexperienced driver." The key word is "considerable." Insurance companies define this as 30 days; that is, if you're an insured driver for 40 years and then you go 30 days without insurance, you start over.
Paragraph 3 begins: "Insurers argue that there is a considerable amount of fraudulent activity occurring as bad drivers camouflage their poor driving record by lapsing their coverage and re-entering the system at a later date as drivers without previous insurance, or a substantial gap in insurance coverage. Insurance companies state that they have no way of verifying this."
What are insurance companies telling us? If you get into an accident today, they will not be able to find a record of it in 30 days? Or 13 months? Or three years? When I re-entered the land of the insured, my broker questioned me on an accident that took place in 1988, nine years previous. The car involved in the accident was a car I had driven and was insured on in 1985. I had never owned the car, nor was I involved in the accident. Perhaps insurers' records are a little better than what they are telling the Minister of Finance.
Paragraph 4 begins, "Unfortunately, the insurance industry does not appear to have systems in place which are able to differentiate between the fraud artist and a legitimate lapse in coverage." So these insurance companies, some of the most well-funded industries in the world, do not have systems in place. It occurs to me that if I control the company that could gouge its best customers for twice the price, I would not have the systems in place to prevent it either. I urge everyone here, if they have the stomach for it, to read this letter several times.
You've heard from many people this week. In a forum such as this, there is a danger, for individuals on the committee do not or cannot identify with some of the speakers. I'd suggest to you that this Saturday you call your insurance broker and request cancellation of your auto insurance. Your broker will tell you to keep fire and theft on the vehicle. You say, "Well, the car's not worth it," and your broker will say, "You will lose your driving status." But you say, "The truth is, the vehicle was towed to the auto wrecking yard." Your broker says: "I didn't hear that. You did not tell me where your car is." You say, "I don't feel right about insuring junk." Your broker will ask: "Do you have any relatives with cars? Will they let you be named as a driver?" You say, "But I will never drive their vehicle." Your broker will say, "That does not matter." Who is encouraging the fraud here?
The fact is, you are not allowed to leave the insurance umbrella in Ontario. Having a vehicle is inconsequential with respect to your requirement for insurance. In order to retain your driving status, you must keep paying. When you speak to your broker, you will realize that every suggestion made to save your driving status will cost you money. What a great industry. I can see the insurance industry being concerned with drivers dropping out of the system for several years and passing themselves off as new drivers, but 30 days or 13 months? Five years maybe. I know they are not calculating my rates with a slide rule, so they must have access to a computer. The province has the ability to follow my driving record.
The problem does not exist in all provinces, so if there is a standard industry practice there may be a competition problem in this industry that merits investigation. What happens if tomorrow I get a traffic ticket or, God forbid, get into an accident? I'm under the belief that I'm on double secret probation now. I anticipate I would go straight to Facility. Would that be fair, my first accident ever?
In closing, I would like to bring your attention to how this industry practice has larger influences. Suppose after my car died, I'd been looking for a new one. Once I'd picked my new car, I would have gone to an insurance broker who would have quoted me a $5,000 to $6,000 cost for full insurance. No way would I buy a new car. Is this the kind of economic message this province wants to send out? How many millions of taxpayer dollars have been spent on encouraging people to use public transit? How successful would the Better Way be if you told drivers that if they stopped driving and took the Better Way, their insurance would double? Thank you.
1820
Mr Hampton: The story that you tell is not an unusual one. I've heard of people who have left the province for awhile, say, moved to British Columbia, moved to Manitoba, have come back and have had to go through a lot of work and a lot of effort to convince an insurance company that their insurance didn't lapse and that they were covered at all times, even when they were outside the province. I've had to help some of those folks as constituency cases, and it certainly has led me to the belief that this is more a game than it is associated with any sort of insurance reality.
Let me ask you, what legislative change do you think would correct this situation? I certainly agree with you that insurance companies have well-established computer banks. I know when I get a speeding ticket they have no trouble finding that out very quickly and notifying me of it. Is there a legislative answer to this?
Mr McPolin: I don't pretend to know what insurance companies are legally allowed to access, but I read into it that their argument is that they can't look at other insurers' records. If that is the case, that's one legislative change. If that's not the case, then they are just gouging people.
Mr Wettlaufer: Thank you, Mr McPolin. One thing I would like to know is, how many days were you actually without insurance?
Mr McPolin: I started seeking insurance -- five months, it ended up about eight months. But let me assure you that when I went to the first State Farm agent, he didn't care. He didn't ask for anything as soon as he heard 30 days -- and as far as I know, there's no graduated status. They don't say, "Well, you lose one star for 30 days."
Mr Wettlaufer: I'm a little bit unsure about industry practice in so far as 30 days is concerned. I do know that if you don't have insurance for at least 12 months out of the 24-month period, that is in fact the case; that is the industry practice. However, there is something else that people probably don't know, that there are a few insurance companies which will not share their experience on a particular individual with other companies, and perhaps State Farm is one of them.
You do make an interesting suggestion that your insurance should follow your driving record. That might be something we could take up with the Ministry of Transportation, because up until perhaps 15 years ago the motor vehicle abstracts produced by the Ministry of Transportation included the item of accident at-fault. It no longer includes that and that is one of the problems insurance companies have, that they cannot access the information of an accident at-fault if the company with which you were previously insured will not give that information. So that might be something we can explore.
Ms Castrilli: Mr McPolin, there's me left. I'll keep you a very short, brief moment.
Mr McPolin: Oh, no. I'm in no rush.
Ms Castrilli: I don't have any questions for you. I just have a comment. This is a common occurrence. I've seen it happen particularly with seniors who forget to reapply and miss that 30-day window and it's something which is of great concern in my riding, where I do have a very large senior population.
I know Mr Gerretsen's interest in this issue. He's a colleague of mine. You should know that another colleague of mine, Mario Sergio, has introduced a private member's bill to deal just with the situation. We would certainly endorse it and we would hope that the government will include that, either in the amendments to this bill or as a private member's bill, to deal with honest citizens who are not trying to defraud the system. So thank you very much for coming in and telling us.
Mr McPolin: I appreciate that. I think that most insurance companies should just have the logo, "We Own You." Then we'd know.
Ms Castrilli: Point well taken. Thank you very much.
The Chair: Thank you very much, Mr McPolin. You have a large number of people whom I'm sure you represent.
NORMAN PARSON
The Chair: Mr Norman Parson, we have 20 minutes to spend together.
Mr Norman Parson: Thank you very much, Mr Chairman. I appreciate the opportunity to present my views. My name is Norm Parson. I have lived all my life in Toronto, Ontario, and have been driving since 1946. During that time, I estimate that I have paid in excess of $25,000 in auto insurance premiums and have claimed less than $5,000. To me, the present auto insurance act is a very unjust and unfair piece of legislation, not only to the purchasers of insurance but also to victims. It does, however, give the insurers a compulsory market and an opportunity to make exorbitant profits. Now they have the Facility Association, where a driver is deemed a high risk if four or more points are accumulated in the last six years.
On Monday, during the presentation by the Insurance Bureau of Canada, we heard one representative state that his company left the standard market and went into the Facility Association because there were more profits. This risk point system is very unjust for many reasons. Risk points accumulate over a period of five or six years. This is not clearly defined in the insurance risk point chart. Driver demerit points are only kept for three years.
Risk points are assigned without any opportunity for defence. Demerit points are assigned after a conviction in a court or if a plea of guilty is rendered.
Risk points are the same no matter where you live, yet insurance rates show that in Toronto you have a 50% higher chance of a claim than in Ottawa. This is indicated in a publication called Your Guide to Rates in Ontario, prepared by the Ontario Insurance Commission in 1995.
Points lost due to Criminal Code convictions. The Facility Association brochure does not define this. Major and minor convictions are too severe for drivers with less than four years of driving experience. Due to the new graduated licensing system in Ontario, new drivers will now actually have more driving experience. Also, given that new drivers are much more likely to get into accidents, the industry does charge them higher premiums and always has.
No evidence of coverage. During the recent recession, which has been going on for five years now, many citizens of Ontario have had to sell their vehicles or have left Ontario to find employment.
Referring to this Facility Association with their unjust appraisal of high-risk drivers without an appeal and the fact that when a member of this committee asked, "What is the definition of a good driver?" the Insurance Bureau of Canada on Monday did not reply, I would like the government to immediately stop this practice, as it is depriving drivers in this province the opportunity of obtaining auto insurance that is required by law.
As regards the cost of the Facility Association insurance, regardless of what was actually paid in claims, I can only compare with my own figures which, as I previously stated, have totalled less than $5,000. To be covered under the Facility Association, my own broker has quoted me $4,411, and with taxes it totals $4,631. I obtained a quotation from State Farm Insurance of $5,416, which comes to $5,686 with taxes. Under Vachon, which is a member of Kingsway, the premium would be $4,706, for a total of $4,941 with taxes. According to my figures, the average premium I am asked to pay is $5,086. Paying this for six years would total $30,519 and, coupled with the $25,000 or more I have already paid in premiums over the last 50 years, would in effect represent the purchase price of almost four new average automobiles.
1830
From this explanation, and by the large number of drivers put into this Facility Association in the last year, I am sure that it will eventually show up in decreased sales of new cars, the automobile industry closing down or greatly reducing their production, more unemployment, less taxes for the Ontario government to operate on -- in short, a downfall in the province's economic growth.
The automobile insurance industry is always lamenting that they are not making any profits, yet in 1990 when the people of Ontario voted for a government that was going to bring in government auto insurance, this industry spent millions of dollars in various ways to keep an industry that was losing money. At that time, the Insurance Bureau of Canada published a brochure in which they stated the industry had paid somewhere in the neighbourhood of $149 million of taxes to the province of Ontario alone. Remember, taxes are based only on profits. In their presentation on Monday, they stated that in the next five years, even with the reduced payments as proposed in this draft legislation, rates will increase between 35% and 45%. To me, this indicates that this industry is greedy and is exploiting the citizens of this province who are, by law, required to do business with them.
The first piece of legislation this government repealed was the labour law and now the government is reducing benefits under workers' compensation, both of which affect the average Ontario citizen. It was stated on Monday that the average gross income in Ontario is $42,000. Considering all deductions, the net take-home income is only $21,000. I have estimated an average budget for this income:
|
Housing |
$8,400 |
|
Food |
10,400 |
|
House insurance |
1,000 |
|
Utilities including heating |
3,000 |
|
Clothing |
1,000 |
|
Automobile |
3,600 |
|
Gasoline |
2,500 |
|
Auto insurance |
3,000 |
The auto insurance figure is based on profile 3 in the Guide to Rates in Ontario. The total comes to $32,900. Just with this simple budget, the family has a budget deficit of $11,900. This clearly indicates that the last three items must be eliminated.
In our province, where I believe there are some six million licensed drivers, this would mean that about five million fewer automobiles would be purchased, five million less insurance premiums paid, untold less provincial tax revenue from gasoline, sales tax, not to forget the provincial income tax lost due to the large number now employed in the auto industry that will become unemployed and thus be added to the welfare rolls.
Ever since I began driving I could never understand why public liability and property damage was placed on the automobile when, in reality, it is the driver that is ultimately responsible for causing the damage. I believe that now is the time for the government to start having compulsory liability and property damage placed on the driver's licence instead of the vehicle. This is turning the clock back, but then, it is common sense.
I was impressed with the presentation made by the Insurance Bureau of Canada on Monday, by the numbers in attendance, by the calibre of people in attendance, as well as the skilful presentation and coordination of the presentations. I would estimate that the bureau's submission must have cost in the neighbourhood of $10,000. This for an industry that is losing money?
I would like to recommend that this government repeal the Compulsory Automobile Insurance Act which, in my opinion, gives one industry the right to rob the people of Ontario legally. I would propose that the government consider increasing the driver's licence fee to approximately $400 per year or whatever the cost for accident damages would be in that neighbourhood, or give the option of providing proof of insurance coverage for the levels set by the government. This would allow owners of automobiles to have a choice of insuring their vehicles for collision, theft, fire, plus the option of additional coverage for injury etc.
In conclusion, I would like to thank all the members of this committee for giving me this opportunity to air my views on this important issue. I sincerely hope that I did not offend anyone through my remarks. I do hope that the members of the Legislature will always remember that in deliberating all their decisions, they should bear in mind the fundamental basic principle of democracy: What is best for the majority of the people.
Mr Wettlaufer: Thank you, Mr Parson, for your appearance today. One area you may not be aware of is that the $149 million of taxes which are paid to the province work out to about 3% of the premium dollar that the insurance companies collect and that equates to the tax that they must pay on premiums collected, not profits. That's a tax that insurance companies must pay.
What I would like to ask is, when you talk about the five- or six-year risk points, are you aware of why the insurance companies calculate risk points over a five- or six-year period?
Mr Parson: No, I'm afraid I'm not. It's not publicized.
Mr Wettlaufer: Okay. What it is really is that insurance rates are calculated on a base rate of zero years accident-free, and most insurance companies have categories for one, two, three, four, five and six years accident-free. In order to properly assess what the credit should be for those years, they must keep track of those risk points, which are based on convictions and accidents. That's the purpose of it. I won't say whether I feel that the companies are entirely justified in all of their practices. I will leave that for another day and another person.
Ms Castrilli: Thank you very much for coming in. Obviously you've experienced firsthand some injustice, or what you consider injustice, at the hands of insurance companies. I just want to be clear on what it is you're saying. You're saying that you would like an opportunity to appeal the decisions that are made by insurance companies. Is that the thrust of your discussion? In other words, you're assessed as a risk factor but you're not --
Mr Parson: That is one part, yes. You do not have a chance to explain. They don't even look into the figures. It's just that you had an accident. The accident might only have been $200.
Ms Castrilli: So you would like the opportunity to say there are extenuating circumstances, or the damage was minimal, or bring in any other consideration that you thought was relevant.
Mr Parson: Yes. Also, as I think was pointed out, even though you might be assessed as the person causing the accident, you may not always have been the original origin because, when I was taught to drive, it was considered, in Ontario at that time, if you could avoid an accident, you did it.
Now it's quite possible, quite often it's happened that you'll be driving along and you're in your lane. Another vehicle decides to turn into your lane. In order to miss him, you swing into another lane. You don't hit the vehicle that hit in front of you because you were trying to avoid him, but unfortunately, somebody coming in the other lane hits you. When it comes, you would be assessed as the at-fault person by the insurance because you turned in. The other person was in their lane, but you missed causing an accident in the front. You have a choice: You either drive through the fellow in front of you, and then again it might come to a point that they could assess both of you at fault. So then both drivers are in it.
It is not a fair system. The insurance companies -- and we've heard in this part here about their fraud -- you are quite aware, it was mentioned by one of your colleagues that the auto collision people, when you go in there, ask you, "Who's paying for it, you or the insurance company?" If the insurance company is paying, it's substantially higher. The insurance companies know this. This has been going on for years. It's nothing new. But what have they done to prevent this on their side?
Ms Castrilli: Thank you. I know you've been following these hearings from the beginning. Thank you for staying all day. I think you've been here all day to give your presentation.
Mr Parson: Yes, I have today. There was a lot I wanted to hear and it has been very beneficial.
The Chair: Thank you very much for coming in and sharing your experiences and your opinions with us today. We appreciate it. That concludes our agenda for this afternoon. This committee stands adjourned until Monday morning in Thunder Bay.
The committee adjourned at 1842.