The Amount of Fraud in Ontario

The Auto Insurance Anti-Fraud Task Force delivered a Status Update to the government on July 23, 2012. I will be providing a review of the report on this blog. Today I will review the Task Force's efforts to estimate the amount of fraud in Ontario.

At the time of the Interim Report the Task Force was not sufficiently informed to make a quantitative estimate of the extent of auto insurance fraud in Ontario. It did conclude that the figure of $1.3 billion that has been used to describe the cost of auto insurance fraud in Ontario for some time cannot be considered a verifiable measure of the current extent of fraud.

Although not able to measure the extent of fraud, the Interim Report conceptually defined auto insurance fraud in three categories:

Organized Fraud: several participants with different roles within Ontario’s auto insurance system create an organized scheme designed to generate cash flow through a pattern of fraudulent activity;

Premeditated Fraud: a participant within Ontario’s auto insurance system consistently charges insurers for goods or services not provided, or provides and charges for goods and services that are not necessary; the participant is involved in a pattern of fraudulent activity, possibly at the expense of motor vehicle collision victims or possibly with their complicity; and

Opportunistic Fraud: an individual pads the value of his or her auto insurance claims by claiming for benefits or other goods and services that are unnecessary or unrelated to the collision that caused the claim.

The Interim Report reviewed trends in claims cost data and information gathered from industry stakeholders and regulators. This review led to the following conclusions:

• auto insurance claims costs, specifically Accident Benefits claims costs, increased dramatically from 2006 to 2010, and this increase in costs had a direct impact on auto insurance premiums.
• a large and unexplained gap exists between changes in Accident Benefits claims costs and changes in factors that would have been expected to influence those costs; this ‘unexplained gap’ amounted in 2010 to an average of $300 per insured motor vehicle in Ontario.
• the most dramatic increase in costs has occurred in the Greater Toronto Area, where the ‘unexplained gap’ in 2010 amounted to an average of $700 per insured motor vehicle.
• anecdotal evidence suggests that fraudulent activity, and in particular, premeditated and organized fraud may have accounted for a substantial portion of the ‘unexplained gap’.

IBC engaged KPMG Forensic to conduct a study aimed at estimating the extent of auto insurance fraud in Ontario. This study was provided to the Task Force and is available online. The Task Force also engaged Ernst & Young to provide the Task Force with an independent assessment of the KPMG methodology and results. Their study is also available online.

The KPMG study concluded that “there is insufficient information to provide a precise and statistically based estimate of auto insurance fraud in Ontario.” The study did, however, provide a wide range for the scope of fraud. It estimated that the cost could range from 9-18% of annual claims costs, which in 2010 would have amounted to between $769 million and $1.56 billion. KPMG calculated the impact of this estimate of fraud on the average auto insurance premium in the province to be between $116-236 in 2010.

KPMG primarily used the data analytics studies, which combine claims information from participating companies with highly sophisticated tools that can identify suspicious patterns between claims, to develop an estimate of the extent of organized fraud in Ontario. Their report notes that these studies were undertaken by insurers to test the use of fraud identification technologies in their businesses, and not for research purposes.

KPMG was able to extrapolate results from two of the three studies to estimate the scope of organized fraud. The design limitations, in KPMG’s view, made the extrapolations consistent underestimates of the true extent of organized fraud. While recognizing this problem of underestimation, as well as the importance of providing some quantification, KPMG noted that, on the basis of its review of these studies, organized fraud in Ontario was at least in the range of $175-275 million in 2010. The cost of Organized and Opportunistic Fraud could be between $769 million and $1.56 billion annually. KPMG indicated that their estimates are understated because industry-wide data was not used in the studies and excluded certain types of claims.

Ernst & Young has completed a preliminary assessment of KPMG’s report in which it also agrees that organized fraud is likely greater than the range estimated by the data analytics studies used by KPMG.

KPMG has not included Premeditated Fraud in their estimate of total fraud in Ontario.

In addition, Ernst & Young indicated that KPMG’s report may significantly underestimate the extent of overall auto insurance fraud in Ontario because it does not specifically address premeditated fraud, which, as Ernst & Young noted, could range between $130 to $260 million per year. Combining this estimate of premeditated fraud with KPMG’s understated estimate of organized fraud, creates a value of organized and premeditated auto insurance fraud in Ontario of between $305 to $535 million per year (which itself should also be viewed as an underestimate).

Conclusion

Judging from these two reports it appears that the $1.3 billion figure that has been bounced around for years may have some merit. When looking at the combined total of Opportunistic, Premeditated and Organized Fraud it may very well have been above billion dollars prior and up to 2010. However, there is no discussion on the impact of the 2010 auto insurance reforms on fraudulent claims in Ontario. Although it is still early to assess what impact those reforms have had on the sector.

Proposed Regulatory Model For Healthcare and Assessment Facilities

The Auto Insurance Anti-Fraud Task Force delivered a status update today to the government. I will be providing a review of the report on this blog over the next week. Today I will review a proposed model for regulating healthcare and assessment facilities that operate in the Ontario auto insurance sector.

I worked on the model on behalf of the Task Force and hope that readers of this blog take the time to review it and provide the Task Force with feedback.

The proposed regulatory model is intended to:

• Create barriers for healthcare/assessment facilities that wish to practice in the Ontario auto insurance system based on a "fit and proper" test.
• Sanction participants for fraudulent acts including denying the ability to operate in the Ontario auto insurance sector.
• Evolve HCAI into a regulatory tool to support market conduct regulation and a mechanism to sanction fraudulent behaviour.
• Designate a "regulator" with appropriate powers to oversee the market conduct of healthcare/assessment facilities and coordinate with the health regulatory colleges on issues dealing with professional misconduct. The proposed regulator would be FSCO.

All providers of medical and rehabilitation goods and services as well as providers of independent medical assessments would be covered by this model including:

• Multi-disciplinary treatment facilities
• Regulated health professions who are sole practitioners
• Assessment facilities supporting insurers and claimants
• Unregulated providers who provide specialized medical and rehabilitation services to claimants (e.g., vocational rehabilitation, case management, home modifications)

There would be 3 types of licences issued by FSCO. Licences would be not be transferable.

• Facility Licences for large providers (based on HCAI billings)
• Restricted Licences for providers not owned or operated by a regulated health professional
• General Licenses for small providers

Facility and Restricted Licences would involve a paper application process while the General Licence would involve an electronic filing process similar to the HCAI registration process. Licences would be valid for one year and would be renewed by submitting an acceptable Annual Information Return which would be an electronic filing process that would update the information on file at FSCO.

Facilities would be required to maintain business practice standards set out by FSCO, a combination of Regulations, the existing HCAI terms and conditions, and Superintendent's directives/guidelines. The regulatory health colleges would continue to be responsible for clinical practice standards of the regulated health professions working in the licensed facilities.

Some of the new proposed business standards include:

• No owner, operator, director or practitioner may have a felony conviction (going back 5 years)
• Facility is independent of all insurance companies, claims adjusting companies, personal injury lawyers and paralegal operating in the auto insurance sector
• Clinical Director of a facility with a Facility Licence must be a regulated health professional
• Clinical Director must be on-site for a minimum of 50% of the facility's operating hours
• If the facility is conducting third party medical exams, all practitioners conducting exams must have at least five years of applicable clinical experience and attest that they working within their scope of practice
• Facility will file all fees with FSCO and will not invoice for amounts that unreasonably exceed amounts charged by others for similar goods and services

FSCO will be provided with new authorities with respect to licence applicants and licensed facilities:

• Deny a licence application for failing to meet the required standards
• Investigate complaints regarding improper business practices of licensees
• Conduct risked based audits of licensees
• Issue orders to licensees regarding deficient business practices
  
• Suspend licenses of facilities and/or individuals for fraudulent practices or for ongoing deficient business practices
• Pass on to the appropriate authority when suspected criminal activity is uncovered
• Inform HCAI and Regulatory Colleges of facilities and health professionals that have been sanctioned
• Inform the public of enforcement action

HCAI would have a role in the licensing process. HCAI would be expected to develop a quarterly attestations regarding accuracy and appropriateness of bills submitted through HCAI. Facilities that failed to complete the attestations would have their billing privileges suspended.

Ontario Appeals Court upholds large non-economic loss award decision for young children who lost their mother

Ontario's top court has upheld a jury award of more than 100-thousand dollars to each of two young children for the loss of their mother in a car crash.

The Appeal Court says the amounts may have been high but were still reasonable.

The case involved the death of 30-year-old Michelle Vokes, who was killed when her minivan was demolished by a car driven by Randy Palmer six years ago in Owen Sound, Ontario.

Palmer was driving as fast as 120 kilometres an hour in a 50 zone when he slammed into Vokes.

The awards of $135,000 to the then-three-year-old daughter and $1117,000 to the then-five-year-old daughter $117,000 for the loss of care, guidance and companionship of their mother set new benchmarks. The previous high award to a child who lost a parent in Ontario, $65,000, was awarded in 2011.

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Standing Committee on Finance and Economic Affairs Auto Insurance Hearings - Day 3

The following are summaries of presentations made on July 10, 2012.

Ontario Trial Lawyers Association
Andrew Murray

On the issue of catastrophic impairment changes the perspective that I have to offer is from my review and summary of the freedom-of-information data.

We’ve heard the superintendent and from Minister Duncan comment that it’s all about science and getting the medical science right. When you take a look at the minutes from the expert panel group and some of their weekly commentary, which is not information that was ever disclosed publicly—it’s clear that it’s much more vague than how it has been presented in terms of this being a consensus viewpoint, certainly in terms of this all just being about the science.

Almost all of the panel members made comments, initially, indicating support for the notion of combining mental and physical impairments together when looking at the whole-person impairment. That ultimately did not form part of the recommendations, but when you look at the commentary, you can see that they were struggling with this. It almost looks like there was, for some reason, some arm-twisting going on.

With respect to whether or not the current definition for brain impairment, being a Glasgow coma score of nine or less, was appropriate, the initial dialogue between the eight panel members resulted in only three of them strongly disagreeing or disagreeing, so sort of being against that notion. It begs the question that if their initial impression was that it’s probably an adequate tool, why have the need for a change to make something more complicated?

When asked to provide recommendations for improvement to the definition of catastrophic impairment, one of the comments was this: “One thing is certain: It is not always better to change a system without understanding the consequences of implementing new rules.”

On the issue of combining—this is combining mental and physical impairments—one of the comments was this: “To enshrine the prohibition to quantify is arbitrary, discriminatory and inaccurate.” I note that the Court of Appeal has more or less made similar comments, but on the expert panel itself, certainly this individual supported the need to combine mental and physical impairments.

Pierre Côté, who was the chair, had this comment: “How things are done in the field is beyond the scope of this project.” So, expert panel, don’t be concerned about what actually happens in the field. It’s a huge issue but not required in order to make recommendations on the definition. We say, of course, that that is wrong-headed and that you must have regard for what’s going on in the trenches before you make any of the changes.

Willie Handler, who was involved at the time, noted that the cost impact of what the expert panel was analyzing was not part of the discussion. That was off the table. It wasn’t something that they were to consider. It will be a discussion that the government will be undertaking later.

I now want to make some comments about the superintendent’s recommendations, because that’s new from the time of my last appearance. Something that was new was the recommendation by Mr. Howell to have family physicians sign all of the insurance forms for ongoing treatment and therapies for individuals who have a catastrophic impairment. There are some significant flaws with that approach. First off, as we all know, many people do not have a family physician. Even those who have a family doctor will fill find that the doctor is very disinterested because they’re busy.

Phil Howell is to be commended for hearing the stakeholders when they said that you cannot make hospitalization in an in-patient rehab facility a prerequisite to passing any of these various definitions.

I want to end this segment of my talk reflecting on the interim catastrophic impairment designation, because the expert panel said that there needs to be some mechanism to get benefits in a timely way to those who need them, and they came up with the interim catastrophic impairment designation. Mr. Howell, unfortunately, seems to have hollowed out the spirit and intent of that recommendation by restricting any interim benefits, seemingly for all categories, attendant care and medical rehab, to an additional $50,000. This interim benefit, essentially, for those who have an interim catastrophic designation, would simply restore a benefit that people had 15 years ago.

What are OTLA’s main criticisms with the proposals that have been put forward by Mr. Howell? We say it is far too complex. If these recommendations are accepted, we now have injected into the analysis the American Spinal Injury Association classification of spinal injury; the extended Glasgow outcome scale for traumatic brain injuries; the global assessment of functioning for psychiatric disorders; and a very long list of psychiatric impairments.

I can tell you that whenever you add new tests like this, which incorporate external documents, you’re injecting uncertainty, you’re adding unpredictability to the system, you’re going to increase the disputes.

Our other main criticism is rebutting the suggestion that this is all just based on good science. I’m hopeful that the excerpts that I reviewed with you from our freedom-of-information request show how even the expert panel didn’t feel that this was all about good science. You may use some scientific measurements to assist you, but when it comes down to figuring out where on a spectrum someone sits, it’s basically a policy decision.

The last point that I want to make, then, relates to the need for data and the type of data that this group should insist on having and should use your powers to obtain in order to make properly informed decisions.

Hughes Intelligence Investigation Services
Barry Bentley
Ron Prior

The Ontario Auto Insurance Anti-Fraud Task Force December 2011 interim report identified four key areas which they believe need to be addressed—prevention, detection, investigation and enforcement—to successfully combat fraudulent activity and its effect on automobile insurance premiums and related health care expenses in Ontario. We agree with this finding, along with the need for consumer awareness of fraudulent activities.

In our experience, it is essential to establish a central control unit which utilizes all available police and private investigator resources in Ontario to reduce fraudulent activities.

Mr. Justice Archie Campbell recommended that police meet required core competencies. We recommend that a similar approach be taken to combat fraudulent automobile insurance injury claims, including health care fraud. To meet this objective, we recommend the following:

—adopt a criminal investigation technique similar to those developed by the United States Health and Human Services Office of Inspector General;

—develop a central and regional insurance fraud control unit and certification programs;

—implement a health care fraud investigation certification program for investigators, adjusters, service providers and all others involved in insurance fraud assessment, review, prevention, detection, investigation and enforcement;

—apply statistical and artificial intelligence fraud detection techniques to existing data banks. Remove barriers to data mining by certified fraud investigators;

—explore the development of a special roster of crown prosecutors specializing in handling insurance and health care fraud cases.

[For anyone reading the Hansards transcripts there is a quote from Mr. Paul: Basically, an insurance company right now can’t walk into a chiropractor’s office or a physiotherapist’s office or a healthy-equipment supply place and say, “You’ve billed us. We want to see your invoices or we want to see your records.” They can’t do that right now. I feel compelled to provide a correction. O. Reg. 194/11 amended the SABS to include provisions (ss. 46.1, 46.2 and 55) that enhance the ability of insurers to seek verification of invoices received for goods and services provided to claimants. Those amendments came into force on July 1, 2011.]

Dr. Michel Lacerte

I want to give you my perspective as a busy treating physiatrist, which is a specialist in physical medicine and rehabilitation, and also the perspective of a rehabilitation counsellor and, on occasion, a disability management policy analyst.

I would like to stress that when we’re talking about all of this, we’re talking very much about private sector rehabilitation, and I have strong views in terms of strengthening the public health care system that basically treats everybody equally.

Since the beginning of my practice in 1990, being trained in the US, I clearly identified the Americanization and lawyer-ization of service delivery in Ontario. You see many American companies where services that are being provided in a gunshot approach, which is basically you come in the door and you can have access to all sorts of treatment, not just the physio, not just the chiro. What is important is that in contrast to the US system, we do not have strong utilization management controls.

Hospitals have been creative and have been offering their own private services. The reason why, in many cases, they move them out quickly is so that they can get other services—the other door. Hospitals right now can go in direct competition with the folks and in many cases will take away the folks who were providing physiotherapy, for example, to the public and will put them instead to provide services now that can be billed to insurers.

What is important for me is that when you look at rehabilitation right now, we’re really facing what I would refer to as a Chinese buffet, because basically you can have all sorts of services; there’s no limit. You want to have aromatherapy? You want to have a colon enema?

What we see is that the family doctor, as was referred to earlier, is oftentimes not equipped or remunerated to try to do the case management, so by default in many cases, plaintiff lawyers basically have hijacked the whole rehabilitation service delivery in Ontario.

I agree, when we were talking about for catastrophic, that there should be—the family physician maybe is not the best person, but at least make it a physician. To raise the case manager to be the one doing it—many of them have no background; they may be social workers, and they’re generally selected by the plaintiff attorney—is absurd. I would certainly not support this.

Katherine Worotny

I am a brain injury survivor. I’ve come to talk to you today from a survivor’s perspective on the changes to the catastrophic definition and what that means to other survivors and to drivers in Ontario who may one day be in a crash.

Back in 2001, I was a founding board member of the Brain Injury Association of Windsor/Essex County, and 11 years later I’m still an active board member. As our local survivor representative to the Ontario Brain Injury Association advisory committee, I go to Toronto five times a year. My job is to bring survivor concerns locally to the provincial level.

Before my car crash I was a teacher in life skills and I was a supervisor of six educational assistants and had 21 mentally and physically handicapped students in my class. I spent eight years in rehab. Today, 19 years after my car crash, I still do some therapies. I never went back to my career as a teacher. I do volunteer work with the Chrysalis Day Club and I volunteer at Hôtel-Dieu trauma services.

I want to just end this by saying I understand that the proposed changes to auto insurance may make it harder for people who are seriously and catastrophically injured to get benefits, including the medical and rehabilitative benefits that they need. This means that they will look to the public system and they will go without therapy. This is troublesome. After an accident or a car crash, people want to get better. I am an example of how, after a crash, someone can be rehabilitated and is able to give back to the community. Without therapy, paid for by my car accident insurance company, I would not be where I am today.

On behalf of car crash survivors like myself, I would like you to consider how changing the definition and making it harder to get benefits after a crash will affect other crash victims like me.

Honourable Howard Pawley

I should say that in 1969, the newly elected Premier Schreyer contacted me and said, “I want you to look after the red-hot-button issue: automobile insurance.” We established a committee called the feasibility committee—feasibility insofar as whether public automobile insurance ought to be established or not. We travelled throughout the province. We heard from Manitobans. When we returned, we recommended the establishment of public automobile insurance.

Subsequent to that, I became the minister who was responsible for introducing it in the Legislature. It was enacted, and I was the first chair of the Manitoba Public Insurance Corp., so I do come with a certain amount of bias this morning, because of what has been a very positive experience.

When the decision is made to establish compulsory and universal coverage, it follows that there must be an obligation on the part of government to provide auto insurance at the lowest possible price.

The most effective way of comparing auto insurance programs from province to province is to look at how much of every premium dollar is returned to the ratepayer in the form of claims payments and benefits. This gives us an apples-to-apples comparison. Recent published annual reports illustrate how the administrative costs of the public plan avoid costly administrative duplication and are only one half as much as those incurred by private insurance companies. Public plans return a maximum return of each premium dollar of 85 cents to 90 cents—that’s administrative costs. With private plans, the administrative costs range from 65 cents to 70 cents on the premium dollar.

Since 2002, Manitoba’s auto insurance cost has increased at a much lower rate, 1.5%, as compared to the countrywide performance of 5.3%—3.5 times less than the national average. Last year and this year, MPI returned just over 90 cents on the dollar.

The inclusion of basic compulsory automobile insurance with the licence plate is the most efficient and economically capable method of delivery. Supplementary auto insurance is also available from either government plans or from private auto insurance companies.

For example, a 21-year-old male with a clean driving record living in Ontario would pay more than six times the rate that we charge, and in Alberta, it would be 2.5 times what the province of Manitoba would charge.

Why do public, driver-owned, public-profit auto insurance plans win, hands down, over the private auto insurance systems? Provincial insurance corporations, as the owners of public auto insurance, have every political reason to reduce accidents and claims by insisting on safer driving conditions for their motorists, and pursue traffic safety and loss-prevention programs.

In Manitoba, there is no discrimination based on age or sex. Bad motorists are surcharged additional dollars on their driver’s permit. That is a fairer way than discriminating based on sex or age.

This past year, the Public Utilities Board ordered that a dividend be paid to Autopac customers, which means a $338-million rebate, plus lower rates for most. The dividend gave motorists varying amounts of rebate. It’s not unusual for them to range from $250 to $350 for that one year.

Ontario and other provinces have legislated reduced benefits, unfortunately and sadly—and this where the catastrophic comes in, where I think it’s basically wrong in principle—where there has been legislation of reduced benefits by putting caps on payments to the victims of crashes in the hope rates will come down, but rates haven’t come down elsewhere.

In Ontario there exists a minor role for regulatory bodies in respect to rate applications. There must be an appropriate and strong regulatory body to examine the following issues:

(1) It should examine significant cuts in coverage in auto insurance, resulting in the introduction of deductibles and caps in respect to awards and general damages. Can we be assured the insurance companies are passing all these savings on to the motorists?

(2) Are there costs or expenditures included in rate calculations for Ontario for losses, for adverse experiences encountered in other jurisdictions, including other Canadian provinces that operate with private insurance? If so, should we object to any such inclusion?

(3) Is the investment income properly reflected in the rate calculations and being used to reduce premiums or increase benefits?

(4) Is there industry creaming taking place? Some companies offer very low rates by limiting their business to only the least risky motorists. The result of this can be highly unfair rates to younger and risk-prone drivers.

(5) Do the rates charged in the various regions reflect the loss experience in that particular region?

(6) Are private companies promoting accident benefit programs, as they do in western Canada, where governments, as the owners of public auto insurance, have every political reason to reduce accidents by insisting and encouraging safer driving conditions for their motorists?

Victoria Cross

I’m a general practice lawyer here in Windsor.

I want to make three points. I recommend that this committee expand its mandate to include serious, intense, short-time-limited public review of the various public models of auto insurance in Canada for the express purpose of developing a made-in-Ontario public auto insurance plan. Second, I want to debunk a few myths and misunderstandings about auto insurance. Third—and this may be even the most imperative—I am going to make an appeal for this committee to take strong recommendations on the comprehensive European trade agreement, so all of Ontario’s future or potential public enterprises and present ones are protected before it’s too late.

The Financial Services Commission of Ontario is preparing for its mandated five-year review of services. All of the auto-insurance-related objectives in its most recent statement of priorities and strategic direction can be met with convening such a public review, and such objectives may be easily amended to include such a review without having to, I believe, go to the Legislature on the matter.

We’ve had 20 years to review our no-fault system and deal with successive periods of increases, regulation and re-regulation. Some can argue that Ontarians prefer our much-revised, modified tort and enhanced no-fault insurance system. This is how it’s provided. Wrong: Insurance providers prefer it.

Injured parties in auto accidents need to be treated as whole beings. It is wrong to return, through the back door, to the days when psychological benefits are limited, and we are left with a meat-chart vision of a person, relying on a capped percentage of impairment. We need lower rates, and rates that will continue to be affordable for persons who are low-income. Fewer young people are choosing to drive, or have chosen to put off learning to drive, due in part to the cost of insurance.

I know that in other provinces, there are perhaps three to five territories. In this province, there are 55 territories available to insurance companies, some of which could be as small as 2,500. That I got from the testimony from May 28. I think that’s something that—you know, the FSCO has been rubber-stamping these requests over and over again. I do not support narrowing territories as a tool to discriminate against drivers. All decisions, and the primary decisions, should be made on the individual driver’s risk. It shouldn’t be about age; it shouldn’t be about marital status or gender.

Driver-based fees are the best way to be fair. Individual driving records should be the predominant, if not the only method, of determining rates. A tort component, I believe, must remain in the system to ensure justice for people.

I do want to say something very important. International agreements will not keep us from setting up a plan. The Lord government retreated in part or in whole because of fears about NAFTA and GATS. That is only true if we let those fears take over. The left and the right in this province have been captured by their own rhetoric about what these trade agreements will mean for insurance. According to Steve Shrybman and Scott Sinclair, NAFTA and GATS are navigable concerns.

CETA involves the provinces in decision-making in a way that NAFTA and GATS do not. The province of Ontario unfortunately has not taken the time or interest, or perhaps has decided not to involve itself in the CETA process.

Brain Injury Association of Thunder Bay and Area
Janet Heitanen
Karen Pontello

The Brain Injury Association of Thunder Bay and Area, which is the regional representation of the Ontario Brain Injury Association, would like to present the following concerns regarding the changes to the cat determination for individuals with traumatic brain injuries, referred to later in this report as TBI.

In supporting people who have sustained brain injuries in motor vehicle collisions, we believe that individuals require a system that emphasizes integrity in the areas of access, accountability, fairness, transparency, consistency and expertise as outlined below.

(1) Access to medical and rehabilitation care: Individuals with TBI require access to care that is available to them in a responsive and timely manner. Individuals require care that addresses their needs at the point in time when it is important for them. In order to access care, funding from their accident benefits must be available for medical and rehab services. The stipulation on the proposed interim cat determination that requires individuals to be treated in an in-patient neurological facility, outpatient rehab program or day-patient rehab program may limit access, particularly if these rehabilitation services are not immediately available in the larger centre of Thunder Bay or if the interest of the individual is to stay in their home community, which is in the rural areas in the district.

The proposed change for removing the Glasgow coma scale used for cat determination, for TBI individuals who are impaired in completion of their daily activities, considering work and other activities, and who are left with a choice of working and being limited in other activities or completing other activities and being unable to work, may no longer meet the catastrophic threshold using the Glasgow outcome scale extended. Without the cat funding available, these individuals will place increased burden on the OHIP system when the non-cat $50,000 limit is depleted.

The proposed change for limiting the combining of impairments and determining cat designation related to whole person impairment is problematic. Individuals who suffer mild to moderate TBI, along with other psychological impairments such as depression, post-traumatic stress disorder and orthopaedic injuries, deal with the combined effect of each impairment on a daily basis.

(2) Accountability, fairness and transparency: Individuals with TBI require their insurance companies to be accountable and fair in managing claims based on medical rehabilitation need. Insurance companies are not responsible for determining need. The management of medical and rehabilitation benefit under the SABS requires transparency so that individuals can receive services to manage the brain injury even when the insurer questions individual need. The ability of the insurance company to question need is considered okay if the individual can continue with services until the need is determined not to be required based on expert opinion.

(3) Consistency: Individuals with TBI require their insurance company to maintain consistency of care as they manage the claims process. For example, a claimant receiving medical and rehabilitation services should have these services continue while insurance examinations are being conducted. For individuals with significant injuries, consistent services are required to maintain the gains achieved in treatment. It is not clear how continuation of services will be addressed as cat determination is being reconsidered with the interim cat designation.

(4) Experience and expertise: Therapists and practitioners treating individuals with TBI and those completing insurance examinations should be using the same frame of reference when assessing individuals’ medical and rehabilitation needs. It is not okay for insurance examiners to have less experience than the treating providers, as opinions may not be reliable or consistent.

Dashcam foils auto accident scam

This "accident" actually took place on Highway 401. The video below shows the view from Herman Sham's vehicle. He appears to come to a stop, and the car in front of him appears to roll backward and strike his vehicle. Sham is seen getting out of his vehicle to discuss the situation with the driver in front, Raguruban Yogarajah. According to Sham, Yogarajah demanded a $500 payment, or he would call the police.

Sham explains in the video that rear-end collisions are generally assumed to be the fault of the driver in back, and that without the dashboard camera, he would have had no way to prove his innocence, and he would have faced an increased insurance premium.

Because Sham captured the event on video, it was Yogarajah who ended up in trouble. According to the Toronto Star, he was charged with fraud, attempted fraud, and public mischief. Yogarajah denied the charges, saying that he was not sure who was at fault, but now realizes that, because his vehicle has a standard transmission, it rolled backward when he thought he was at a stop.

Without the cam it would have been one driver's word against another and who would have believed some would intentionally back into you on the 401? It illustrates how powerless we all are when pulled into a scam like this.

Standing Committee on Finance and Economic Affairs Auto Insurance Hearings - Day 2

The following are summaries of presentations made on July 10, 2012.

Structured Settlements Group
Douglas Mitchell

My family has been in the insurance business since 1933. I started in 1970, mainly in claims, and by 1985 was primarily negotiating structured settlements. A structured settlement uses a special annuity that enables the defendant insurer to guarantee tax-free future payments to a claimant, saving the defendant insurers in Ontario hundreds of millions of dollars.

There are four full-time structure brokers in Ontario and all are paid by commission when they place the funds for the annuity with a life insurance company. With the changes to the act in 1996 and subsequent, adjustors and lawyers have increasingly relied upon structure brokers to provide quotes on the cost of buying tax-free annuities to cover each of the types of future needs as a basis from which to start negotiations.

Preferred brokers have refused to split commissions with the claimant’s brokers. They say they can represent the best interests of both sides at the same time so the claimant does not need their own expert. The general insurance companies refuse to pay bills submitted as a disbursement by a claimant lawyer for independent structured settlement advice.

This process, over several years, has caused the claimants’ lawyers to be unable to consistently secure independent structure calculations and advice, leaving them to accept whatever calculations and technical information the defendants’ preferred broker suggests.

Some time ago, I undertook to help at least one claimant lawyer each month, even if I knew that I would not be paid. The result was shocking. Out of the scores of cases, there was a mistake on virtually every case, and only once was the mistake in favour of the client. The claimants’ preferred brokers are consistently making mistakes and including assumptions that favour their client, the defendant insurance companies. These mistakes have been as large as $600,000 on a single case and would have gone undetected if it were not for my gratuitous participation in the case.

This situation was prevalent in the United States about 10 years ago and, once exposed, led to many lawsuits against defendant insurance companies. The United States’ industry leaders forced a change to the structured settlement practice, acknowledging that each party is entitled to independent expert advice, and if both sides engage structure brokers, those brokers will share the commission equally.

Insurance Brokers Association of Ontario
Gerry Kylie
Bryan Yetman

I’m sure that most people here understand the difference between brokers and insurers, but I’d just like to reiterate for those who do not that, as brokers, we need to work closely with insurers, but our mandate is to represent our customers’ interests to the insurance companies.

Insurance is a complex product, and I feel, and the law requires, that consumers need and get expert advice tailored to their own individual needs when purchasing the product. My aims and goals will sometimes differ with those of the insurance companies, as my prime responsibility is to advocate on behalf of the public and serve my customers to the best of my abilities.

With respect to the auto insurance fraud and abuse situation, we have to get auto insurance rates under control. I believe the single most important thing that can be done to lower claims costs and thus insurance premiums is to tackle fraud and abuse in Ontario’s auto insurance system, particularly in the accident benefits area.

The Auto Insurance Anti-Fraud Task Force recommendations are scheduled to come out later this year, and I want to urge the government to implement those recommendations as quickly as possible. However, please, let’s not get into a major overhaul of the system. I’ve worked through three different major overhauls of the system in my career, and we don’t need a fourth. What we need is to give the 2010 reforms an opportunity to work. They appear to be having some effect, but we do need to proceed with action on the abuse front. Even with those reforms, don’t be deluded into thinking there are excess profits in the auto insurance area.

In 2005, the Ontario government banned the use of credit scoring in the rating of auto insurance. Shortly after that, many insurers began circumventing the ban by refusing to offer quotes to those who refused access to their credit information. This was finally brought under control by the 2010 auto reform package, which defined use of credit as an “unfair and deceptive practice.” What the insurers have now done is used credit scoring much more aggressively on their property products, which basically subverts the ban. Many consumers buy both property and auto products from the same carrier to take advantage of multi-policy discounts. We have had situations where companies increased their property premiums dramatically—for example, from $900 to $2,200 for house insurance—due to credit scoring, which forces the client to go elsewhere, and thus they divest themselves of an auto policy they don’t want in the process. We have to stop this back-door effect on the automobile consumer. My concern with this is that more and more property insurers are using credit scoring, and soon there won’t be an elsewhere to go.

Ontario Psychological Association
Dr. Amber Smith
Dr. Brian Levitt

In Ontario, psychologists see patients with traumatic injuries under WSIB, auto insurance, victims’ services etc. We’re employed in hospital programs for chronic pain, depression, anxiety disorders, schizophrenia, cognitive impairments and brain injuries. Also, we cannot bill OHIP directly.

With respect to auto insurance, car accidents are the single biggest cause of civilian post-traumatic stress and brain injuries. Psychologists provide the most effective treatments for post-traumatic stress. Psychology is the only profession able to measure and diagnose cognitive impairments due to brain injury.

We tend to be involved with the most seriously injured and vulnerable, we work with high-need victims who have brain injuries and psychological disorders, and we provide services that are critical for recovery and disability prevention. Historically, in terms of the data in Ontario, that’s 2% to 4% of accident victims.

MVA victims with psychological conditions tend to have higher levels of disability. It’s the burden of comorbid conditions, when you combine mental and behavioural with physical impairments. Co-occurring mental and physical disorders create a greater burden on the system, suffer due to shortages of services for mental illness and brain injuries, and then there’s often offloading to the public system, such as CPP, Ontario Works, public housing, prisons, etc.

What we have currently is evidence-based guidelines for assessment and treatment services that are billable under auto insurance in Ontario. They were developed by more than 20 psychologists from around the province and passed by the Ontario Psychological Association board of directors. They are not accepted by the insurance industry. We see consistent denials of everything that’s consistent with these guidelines.

What is working: The anti-fraud task force is working. The college of psychology is part of the professional identity tracker. Many psychologists are now able to track who is billing in their name for whom they’re not working, so we’re really glad for that. HCAI provides utilization and cost data. It should be able to identify outliers that can be investigated. It should make transactions more efficient and reduce transaction costs.

Now, what’s not working: Our assessment and treatment plan approval process is not working. We’re having more denials, more disputes, more delays. There are no reasons given for the denials, no communication with the providers, and the whole process has become far more adversarial.

What do we need to do? Let’s reinstate timelines for decisions so people aren’t lost in this grey zone. Reinstate deemed approval provisions. Improve adjuster education. Ensure approval for plans that are consistent with our evidence-based guidelines. Require communication between insurer and patient or provider prior to denial of service.

We’re getting IEs by other professions. As psychologists, it’s weird to get a second opinion from a GP or a nurse. Decisions that don’t make sense: They don’t understand our guidelines; they’re approving and denying things that we can’t do. Let’s ensure we have appropriate experts for IEs.

Also, the minor injury definition is too blunt an instrument. Cost control is obviously working and there is greater buy-in. The problem is, it’s being used indiscriminately. We have patients every day with clearly documented concussions, brain injury and post-traumatic stress being restricted to the minor injury guideline. This is inappropriate. It’s supposed to be for sprains and strains.

We support the intention in the superintendent's report to introduce elements of evidence-based medicine to the Ontario automobile insurance system. One of the recommendations we have is a simple change in the language in the report from “psychiatric” to “mental and behavioural.” This is most consistent with current research, evidence and practice, to refer to disorders as “mental and behavioural,” not as “psychiatric,” which is a professional designation as opposed to a description of a disorder.

Also, we would like to see a more appropriate threshold for mental and behavioural impairments as comparable to physical impairments. I raise this because in the superintendent’s report, the threshold appears to have been increased or the bar appears to have been raised for mental and behavioural in relation to physical and is discriminatory. We think there should be a shift in the GAF from 40 or less to 50 or less, which would be much more consistent with the other catastrophic definitions.

Another recommendation is to include mental and behavioural impairments in an overall whole-person impairment rating; in other words, to combine all impairments of the whole person, not just physical but mental and behavioural, and that this can be done very easily with a conversion table, that is evidence-based, in the California workers’ comp system.

We’d like to see the removal of the requirement of a restrictive list of specific diagnoses from the mental and behavioural criteria, because this is discriminatory. However, if a specific list is required, we’d like to be included in the process of generating a guideline for it.

Also, allow psychologists to conduct—that is, as lead examiners—examinations for determination of catastrophic mental and behavioural impairments: This is what we’ve done since the inception of the SABS catastrophic, but have been excluded since the 2010 reform.

Then include psychologists among those who may complete applications for catastrophic mental and behavioural impairments and sign the OCF-19s, which, again, we have been able to do since the inception of the SABS and since 2010 have been excluded.

Also, remove the language in terms of any requirements for publicly funded or community-funded services from the definitions, because this does not fully incorporate the reality that there is private funding being used for rehabilitation services.

Ontario Brain Injury Association
Tammy Dumas
Steve Noyes

OBIA is a provincial not-for-profit charity which speaks on behalf of survivors of brain injury, of which there are approximately 500,000 in Ontario. OBIA does not provide direct rehabilitation services to people. Therefore, as an organization, we are not directly impacted by the proposed insurance changes. However, our main priority is to advocate on behalf of people living with brain injury to ensure that they receive the reasonable and necessary services that they are entitled to in order for them to achieve the best possible quality of life given their circumstances.

OBIA is very concerned with the proposed changes in the superintendent’s report on the definition of “catastrophic impairment.” It is our position that the proposed changes from the current definition will be detrimental not only to the severely injured, but to the general population, as services previously covered by insurance will fall to the taxpayer and those utilizing OHIP will be on a longer wait-list for required services.

OBIA is very concerned with the proposed changes in the superintendent’s report on the definition of “catastrophic impairment.” It is our position that the proposed changes from the current definition will be detrimental not only to the severely injured, but to the general population, as services previously covered by insurance will fall to the taxpayer and those utilizing OHIP will be on a longer wait-list for required services.

OBIA has many members who have never spent a day in an in-patient rehab facility, outpatient or day program, but do have severe brain injuries that meet the current definition of catastrophic brain injury.

There are already long wait-lists for in-patient, outpatient and day programs, and by adding this criterion, the proposed changes will only increase the long waiting times for treatment on an already significantly stressed system.

Another concern is the onus on front-line medical personnel to facilitate the admission to outpatient and day programs. The matter to consider is that the requirement for admission to a neurological in-patient centre, outpatient or day program puts the onus on front-line personnel—ER doctors, family doctors etc.—to recognize and diagnose a brain injury but also to facilitate admission into a facility.

The exclusion of community-based rehabilitation programs: The proposed definition completely leaves out the numerous brain injury survivors who seek assistance only through community-based rehab programs. In many cases, these programs are just as valuable and are more cost-effective. Under the proposed definition, these brain injury survivors seeking that type of support would be left out.

We believe that a brain injury survivor who sustains a mild or moderate brain injury, resulting in psychiatric symptoms along with the physical impairment, should not be excluded from being able to combine impairments.

A final concern OBIA has is making family doctors as gatekeepers on treatment and assessment plans. Currently in Ontario, there are almost one million people who do not have a family doctor and will not be able to access any care.

Health Service Management
Viivi Riis

As a physical therapist with more than 30 years of professional practice experience, I’ve treated many people with injuries suffered in automobile collisions. My experience includes services provided at the request of insurers as well as by plaintiff lawyers who represent victims of injuries caused through another party’s negligence. I have obtained a master’s degree in rehabilitation science, with a focus on health services research, and I’ve published three peer-reviewed articles related to the delivery of health services in the private and auto insurance health sectors.

My experience in this field has confirmed to me that claimants, or patients, who can access the right resources at the right time to recover maximally have a better quality of life and tend to participate more fully with their families, the labour market and society at large. At the same time—and this is a very critical point to remember—it’s axiomatic that demand for health care funding will always exceed supply.

The government is faced with a delicate balancing act to weigh the need of injured persons for effective health care with the need of drivers in Ontario for affordable and available auto insurance.

I think these are important if the government wants injured Ontarians to receive evidence-based health services that promote a return to the individual’s pre-accident activities and reintegration into their families, the labour market and society at large.

It’s my opinion that most health professionals are very well-intentioned and want to do the right thing for injured persons. But the system is very complex. This complexity and the influence of other stakeholders such as insurers and lawyers has created confusion and misguided behaviours. Much attention is paid to how much and what kind of treatment is available to injured persons, but very little attention has been placed on whether all that treatment in fact helps the injured person.

Another source of irritation for injured victims is when two medico-legal reports come to conflicting opinions, something that has also been cited by presenters in these hearings and others. This is a very common problem when we have an adversarial system.

There is an absence of consequences for poor health outcomes, and part of the reason for this is that there are no consequences for health professionals if the treatment they deliver doesn’t actually help to improve the injured person’s functioning.

It’s naive to ignore that there are financial incentives built into the system, and these incentives reward prolonged or unnecessary treatment. For example, colleagues of mine, health professionals, have told me of cases where plaintiff lawyers have instructed them to continue treatment, even when that professional has recommended discharge.

There has also been an expanding definition of reasonable and necessary, and I think this language has been problematic, because it’s not concisely defined anywhere for medical professionals. Since I began practising in the auto insurance environment in 1992, there has been a dramatic change in how health professionals perceive the concept of reasonable and necessary.

We often hear that after the first few months after injury, more treatment is important, but in fact, the science tells us that this is not the case. There is new evidence that suggests that in the early stages after minor injuries, less treatment tends to be more effective, so I think it’s very important to consider funding models.

I do have a recommendation about scientific evidence used to support treatment type, dose and duration, and to examine fee-for-service models. I think fee-for-service models tend to reward health providers for a lot of treatment, but they don’t reward health providers for achieving good health outcomes, so if we can look at a shift in funding models, I think that could be valuable.

Collision Industry Information Assistance
John Norris

I am one of the contractors that helped design the Ontario Ministry of Transportation’s stolen and salvage inspection program for shops in Ontario. We have over 500 collision repair shops that are inspection stations that are inspecting rebuilt vehicles to ensure their safety and legitimacy—i.e. they are not stolen—going on the roads of Ontario. I’m also the administrator for the Vehicle Security Professional Program in Canada this year. It just started in Canada after four years in the US, on behalf of the 18 car companies in Canada that import and manufacture in this country, and the after-market technicians. That program provides security data from the manufacturers directly to a qualified tech to fix the car.

Please remember that in all the discussions you’ve heard of treatment plans and bodily injury claim costs, it’s the collision repair shops who are the first to see the car and often the customer. We can tell if the vehicle was damaged now or earlier. We can tell if an accident may not have happened or had been staged. We know if the tow operator tried to sell the collision. We know if the tow operator obtained personal and private customer information so they could sell that information to a treatment clinic.

Shops tell us of abuse details, of tow truck operators selling collision work for a kickback and selling private, personal information of the car accident victim to get their $2,000 commission from the treatment clinic all the way to demands for kickbacks that shops must pay to keep repair work in their shop. Even the parts companies that supply the parts to repair your accident collision damage must pay in kickbacks.

Not a single shop owner would come with me today because they’re too scared to appear with you and be seen in public. They believe that any testimony or presentation to you today on what actually happens after a car accident—what they go through, what they see every day—would be used to shut down and isolate their businesses to the point of business failure, and they simply cannot afford to be blacklisted.

There are treatment clinics that issue commissions of $2,000 to tow drivers who will transfer private, confidential data on accident victims to them. We interviewed a tow driver who makes two calls a week and he gets $125,000 a year. All the rest of that is kickbacks.

The clinic then immediately contacts the accident victims. They advise them that they are an insurance-preferred supplier or an insurance industry provider. Then they’ll set up an expensive treatment plan. They haven’t met the victim yet.

There are tow truck drivers and operators who push for their kickback as they sell the collision-damaged car to a body shop. Those repairs across Ontario now cost the shop, because the shop now seeks to recover the extra dollars paid to the tow operator.

In order for a shop to generate the extra revenue to pay back that chaser, the insurer gets billed for work that wasn’t done; repairs with used or stolen parts that were billed as new; outrageous bills for storage; environmental fees; drop-offs; moving fee; $300 to move the car on the lot; $500 for a piece of cardboard under the vehicle to catch any oil drips; $35 to allow the customer one phone call. If the customer decides to take the car somewhere else for repair: days of frustration, thousands of dollars having to be paid in release fees because that kickback has to be paid somehow.

Kickbacks are demanded by insurers, who often have a huge marketplace dominance and make decisions that determine whether your shop is going to survive or not for up to 10% of the price of the repair as a commission charged to send them their own customers’ business.

Insurers demand that parts be ordered based on a list of suppliers given to the repair shop. No longer can the repair shop deal with suppliers they built up a long-standing relationship with, but they must deal, instead, only with the supply firms that provide a kickback to the insurer.

Standing Committee on Finance and Economic Affairs Auto Insurance Hearings - Day 1

The following are summaries of presentations made on July 9, 2012.

Financial Services Commission of Ontario
Philip Howell. Superintendent of Financial Services and CEO
Tom Golfetto, Executive Director, Auto Insurance Division

Auto insurance is mandatory in Ontario and has been since 1980. It is privately delivered in a competitive market. There are over 100 licensed companies in the province. These companies compete for the business of nine million Ontario drivers who drive 6.6 million vehicles.

According to Ministry of Transportation data, the number of people injured in accidents each year has been falling. In 2009, the latest year for which data is available, only about 62,500 of Ontario’s nine million drivers were injured in accidents. Of these, almost 60,000 suffered injuries that were categorized as only minimal or minor by the MTO definition.

In Ontario, the auto insurance system is a closed-loop system. In simplest terms, this means that the costs of the insurance system are recovered through premiums charged to drivers. These premiums fund the cost of claims, including the cost of treatment provided to those injured in accidents.

Historically, the reforms of the Ontario system have largely been motivated by the need to stabilize rising costs and premiums. The auto insurance system is complex, and there have been several reforms over the past 30-odd years. With each set of changes to the system, there was some initial success in stabilizing costs and premiums, followed by another cycle of rising costs.

The reforms announced by the Ontario government in 2009 and implemented in 2010 have addressed rising costs, many of which stem from abuse.

While the number of personal injury collisions decreased from 2006 to 2009, the number of injury claims made during the same period increased. In addition, between 2006 and 2010, claims costs in Ontario increased by $3 billion. During this period, the cost of an average claim increased by 43%. Accident benefits costs, the primary driver behind these increases, skyrocketed by 118%. Between 2006 and 2010, examination and assessment costs increased by 228%. Without the 2010 reforms, the cost of assessing those injured in accidents likely would have surpassed the cost of treating them in 2011.

The Ontario government appointed an Auto Insurance Anti-Fraud Task Force in 2011 to assess the extent and nature of the fraud in the province’s auto insurance system and to recommend actions to reduce it. The Task Force's December 2011 interim report concluded that fraud in Ontario’s auto insurance system, though it cannot be precisely quantified, is extensive, increasing and having a substantial impact on premiums.

The overutilization of accident benefits through misuse, abuse and apparent fraud was the primary driver behind increases in claims costs and premium increases. Currently, close to 30,000 health care providers are authorized to treat those injured in accidents in Ontario, and over 17,000 of these are members of regulated health care professions. These health care providers service accident victims at over 8,600 health care clinics in Ontario. Insurers also may have contributed to overutilization in the system through inadequate claims management processes. To deal with the volume of claims they were receiving before reforms, some insurers were likely inappropriately approving requests for assessments in medical treatment.

More evidence of overutilization can be seen in the dramatic increases in cases in the dispute resolution process at FSCO. In 2006 we received just over 13,000 requests for mediation; in 2011 we received almost triple that number.

The government implemented a number of longer-term initiatives to follow the September 2010 reforms and underpin achieving greater rate stability going forward. These initiatives focused on the accident benefits system and were based on the presumption that using scientific, outcome-based approaches was the best way to determine appropriate benefits for accident victims. The government direction to FSCO to have medical experts develop a new, medical, evidence-based minor injury treatment protocol. After an open, competitive RFP process, FSCO awarded a contract for this project last week, and work on the project will begin shortly. The government also directed FSCO to consult with medical experts on the definition of catastrophic impairment as set out in the statutory accident benefits schedule. I have submitted my report, the Superintendent’s Report on the Definition of Catastrophic Impairment, to the Minister of Finance. That report was publicly released by the ministry last month and recommends adopting refinements to the definition based on the medical and scientific evidence identified by the expert panel.

FSCO has assigned the responsibility for providing regulatory services that protect the public interest and promote public confidence in auto insurance. The FSCO act and the Insurance Act provide the legislative framework for this responsibility.

Insurers and actuaries examine patterns in past claims to estimate future costs. Their goal is to determine what rates to charge a consumer for the policy period to cover claims costs and operating expenses and to make a profit after taking into account investment income. Based on their actual experience, companies may need to revise their assumptions on prospective costs and future premiums. Insurers must submit proposed changes to their rates to FSCO for approval. FSCO reviews rate filings, analyzing the data supporting the insurer’s actuarial assumptions, to ensure that the proposed rate changes are adequate to maintain the financial solvency of insurers without being excessive.

Companies must file their underwriting rules with FSCO. These are the rules that insurance companies use to determine the risks that they may not accept. Regulations under the Insurance Act define the criteria that cannot be used to deny auto insurance coverage; for example, not-at-fault claims. Specifically, underwriting rules may not be subjective, be arbitrary, be contrary to public policy or bear little relationship to the risk.

Premiums vary based on the individual consumer’s risk characteristics. The mechanism for determining rates is an insurance risk classification system. Risk classification systems set out the factors that an insurer will use when setting the price they charge for auto insurance. They group risks with similar characteristics and expected claims costs.

FSCO also monitors compliance with the Insurance Act, and it takes enforcement action against those who violate it. We regularly conduct audits of insurers to ensure their compliance with regulatory obligations. We also review complaints about individuals and companies that may have engaged in unfair, deceptive or illegal practices under the Insurance Act.

After reviewing these complaints, FSCO may decide that some matters need to be investigated. Following an investigation, if FSCO deems non-compliance with the Insurance Act and its regulations has occurred, it can lay charges under the Provincial Offences Act or take regulatory enforcement actions such as issuing a cease-and-desist order.

I’d like to note that FSCO does not have the power to review or investigate criminal matters, including fraud. Criminal offences must be pursued by the police. FSCO does, however, work co-operatively with law enforcement agencies and provide police with assistance in their investigation of certain criminal matters.

Dr. Harold Becker

I have particular qualifications in catastrophic impairment as I was responsible for chairing an advisory panel that wrote the catastrophic impairment assessment guidelines for designated assessment centres, or DACs, in Ontario in 2001. I also served on the advisory panel that wrote the previous report on the redefinition of catastrophic impairment to the minister, released in 2001. This panel was composed of a physician—me—a psychologist, a neuropsychologist, a pediatrician, a plaintiff lawyer, a defence lawyer, two insurer representatives, two ministry representatives, and three FSCO representatives

I have great difficulty with the expert panel in this sequence because (1) the majority of the panel “experts” were not experts, in fact, in catastrophic impairment; (2) the panel was too small for the methodology chosen; and (3) the reported consensus model, involving six out of eight votes, contributed further to the lack of validity of the panel’s recommendations.

The FSCO expert panel of 2011 consisted of three academic epidemiologists, an academic public health expert, a pediatrician, a psychologist and two physiatrists—these are specialists in physical and rehabilitation medicine. While I highly regard the scientific contribution of epidemiologists to society and to medicine, I do not understand their central role in this panel to tackle the definition of catastrophic impairment, a medico-legal issue, not a fundamentally scientific one.

The expert panel used what is referred to as a modified Delphi method for reaching consensus on their various recommendations. The Delphi methodology states that choosing appropriate members of a panel is the most important step in the entire consensus process because it directly relates to the quality of the results generated. While the Delphi methodology suggests that as few as 10 to 15 panel members can be used, provided there is homogeneity in their backgrounds, much as in the original expert panel of 2001 that I was on, experts recommend that up to 50 members be used when there is a disparate degree of knowledge, experience and training among the members, as was seen in this panel. This panel of diverse participants had only eight members, rendering their consensus of questionable validity.

The expert panel indicated that only a very restricted set of three psychiatric diagnoses could be considered in determining whether a claimant meets the catastrophic definition. In restricting qualifying psychiatric diagnoses to major depressive disorder, post-traumatic stress disorder, or psychotic disorder, the panel discriminated against Ontarians receiving accident benefits on the basis of a mental disability.

While the expert panel’s decision to use the global assessment of functioning, or GAF, score as a tool for rating catastrophic psychiatric impairment is a reasonable one, they set the threshold for catastrophic impairment unreasonably high.

The expert panel’s requirements of institutionalization of claimants suffering mental and behavioural impairment is far too high a threshold and would leave many legitimately impaired claimants suffering mental illness with limited funding.

The failure to acknowledge the coexistence of traumatic brain injury and associated psychiatric impairment, and the expert panel’s corresponding prohibition on allowing separate rating of these two distinct impairments, is seriously flawed and demonstrates a serious bias against both brain-injured claimants and claimants who develop associated psychiatric reactions resultant from traumatic brain injury.

The expert panel’s recommendations would throw seriously injured claimants suffering significant mental illness into the already overburdened, underserviced public sector of psychiatric services.

) The expert panel has no authority to overrule accepted judicial decisions, some at the level of Ontario’s highest court. The Ontario Court of Appeal recently recommended that psychological impairment should be combined with physical impairment when determining a true whole-person impairment rating. The expert panel concluded that there was no scientific evidence to do so and have essentially overruled the Ontario Court of Appeal.

Although the expert panel touted fundamental science as the cornerstone to its deliberations, there is utterly no scientific validity to many of their recommendations.

Sidney Chelsky

I’m a consultant to the laundry, dry cleaning and hospitality industry. I’m outraged at the television ads that depict insurance brokers acting in the best interests of their clients. This, in fact, is not true.

On one occasion my agent suddenly sent me a renewal from another company with an increase of $600 for the year. When I questioned this increase, he said that his agency was no longer affiliated with Lombard and therefore placed it with a company he was affiliated with, and this was the best price he could get me.

I called the insurer, and they provided me with a list of other agents they were affiliated with, so I contacted one of them which promptly provided me with a policy from that same insurer at a further reduced rate. It definitely was not in my best interest to continue with the previous agent.

Again, after a number of years passed, the agency I was insured with sent me a renewal policy which was closer to the price I had previously paid. The policy was with another company. It was a combined auto and home coverage policy. However, on closer examination of the policy, it showed reduced coverage. For example, instead of $200,000 of contents coverage, it was reduced to $40,000.

Again, I searched out an insurance broker to provide me with a quote. After finding a company and a quote that I was satisfied with and paying with my credit card immediately for the policy, I later received the policy with an invoice for an additional amount of $130 for coverage, which was attributed to the fact that my wife had an accident seven years ago and they were charging me for this. I paid the additional amount, then received an additional invoice for a further $320. I phoned the broker and questioned this additional cost, and he later called back and said that it was because the car was registered to my numbered company. All this information was provided to the insurance broker at the time of the quote, and the numbered company information was also provided. I subsequently cancelled the policy and again searched for another insurance broker.

Panel of Clinical Experts Endorsed by the Alliance of Community Medical and Rehabilitation Providers
Tracy Milner
Patricia Howell

We are here to represent a panel that’s comprised of experts in the field of physical medicine, rehabilitation, neurology, psychiatry and neuropsychology; experienced clinicians from both the public and private sectors who work with those who are seriously injured in motor vehicle accidents every day; and a number of not-for-profit groups that support accident victims across Ontario, including the spinal cord and brain injury associations of Ontario.

In 2011, we prepared a detailed, evidence-based critique of the FSCO expert panel report on catastrophic definition. We had outlined very specific and practical revisions. A subgroup of our members met recently to review the recommendations of the superintendent’s final report. We were distressed to see that our recommendations were ignored, with only one notable exception around the removal of the in-patient rehabilitation requirement.

In our original submission, we questioned the reason for change. No data has been released to indicate that the estimated 1% of victims who are currently deemed catastrophic are accessing benefits inappropriately. We also question the composition of the methodology of the panel. Six out of eight members of the FSCO panel are academic researchers with no clinical experience working with auto insurance victims. Half of the panel had been consultants to the IBC, which has introduced a real potential for bias. In addition, it’s important to note that they used a modified Delphi method to develop consensus.

We also feel that the combination of mental and physical impairments should be allowed and that pain should be taken into consideration. Disability can result from the sum effect of physical pain, psychological and cognitive symptoms which can lead to an inability to manage at home, in the community and at work.

We also feel that existing measures should not be replaced until new ones are proven practical, reliable and valid. The FSCO panel and the superintendent acknowledge that further study is indicated for one key test to be used with children with brain injuries. In fact, the FSCO panel rewrote that test. That is no longer a valid or reliable assessment.

We also added in our original submission that many other tools also needed further study. For example, the GOSE, which is used with adults with brain injury, has very poor inter-rater reliability at the key moderate disability cut-off point. Further study is needed. The SCIM, which is an assessment for spinal cord, is a very valid and reliable tool, but only when administered in its entirety. The panel has recommended only use of one subtest. It is also noted that there is actually evidence to support ongoing use of the GCS, the Glasgow coma scale, which the FSCO panel did not appear to consider.

We also disagree with the benchmarks chosen by the panel, as they’re far too difficult to reach. For example, in the case of psychiatric impairments, why would the panel recommend that the cut-off on the GAF test be 40 when a GAF score of 41 to 50 is equivalent to a 55% rating, or marked impairment? In a case of spinal cord, what rationale is there for excluding someone with incomplete paraplegic who can only walk a short distance inside with a walker and will always need a wheelchair to function? Why would we consider excluding the adult whose brain injury is so severe that he can only work at a sheltered workshop? And certainly children who, at a year, still need attendant care for a good part of their day need long-term and intensive support.

The superintendent recommended in his report that he felt that all treatment plans must be signed by a doctor. It’s not realistic, as family doctors do not have the time or the training to oversee the complex rehabilitation needs of these most seriously injured individuals.

The superintendent also recommended that catastrophic assessments be done by doctors alone, without input from a multidisciplinary team. For the same reasons that family doctors should not be gatekeepers, this is highly problematic.

The superintendent recommended that interim catastrophic benefits should be limited to $50,000 and that this would have to cover both medical and rehab benefits, as well as the attendant care needs. A $50,000 cap is completely unreasonable as it will only last for months and will in no way bridge the years it can take to obtain a catastrophic determination.

In addition, the superintendent recommended that those admitted for in-patient, day patient or outpatient rehab should be deemed interim catastrophic. We agree that these individuals need access to early and more intensive supports. However, as there is no access to care in many areas of Ontario and there are no set standards across facilities or across the province for admission to what programs do exist, this criterion is unfair and discriminatory.

Richard Gauthier, Actuary

I’m the partner in charge of the P&C actuarial practice of PricewaterhouseCoopers. As a consultant, I’m the actuarial consultant to the New Brunswick Insurance Board since 2004.

I’m here to present a proposal on how to simplify the rate approval process in such a way as to increase efficiency, give a faster response to requests by the various insurers, permit FSCO to focus their resources on the more important classes of business, create a transparency of the decision-making process and recognize that rates need to be updated regularly.

If I look at the broad goal of automobile insurance, the broad goal of affordability, availability and fairness, there are roles for the government and there are roles for the insurance industry. The government sets up and defines the insurance contract and, consequently, determines the overall costs and affordability of the automobile product. The definitions in the contract basically dictate its overall cost.

On the other hand, the role of the industry is to distribute the cost of the product to the insured population according to each individual’s expected cost. It’s an actuarial principle that has been recognized as generally accepted actuarial practice by the Canadian Institute of Actuaries.

Each time you violate that principle of paying according to the expected costs, you have someone who pays too much for insurance and you have someone who doesn’t pay enough for insurance. It creates a disincentive for the person who is underpriced because it’s a disincentive for them to improve.

For the survival of a company, they must charge according to the expected costs of their insured. Therefore, the industry has a built-in incentive to price individuals appropriately according to their expected costs; no more, no less. We have competition in this province and in this country, in most places, and therefore there is a built-in process, a built-in safeguard, that everybody will pay according to their expected costs.

I suggest, for those recreational vehicles, ATVs, motorcycles—I also suggest commercial non-fleet. They do not look at commercial fleet, five or more vehicles, but I would put commercial non-fleet in that category—not that they’re not important, but they are specialized vehicles. I would suggest that FSCO adopt more oversight and not get too deep into details of approval of every single rating factor and so on. This will free up fiscal resources to better address the more sensitive area of private passenger vehicles. This is the area that impacts the most general population.

The determination of the overall rate level, we study the past, we study the trends and we combine the two to figure out what we think the losses are going to be next year and therefore how much money we’ll require next year.

Significant resources at the company and at FSCO are required to do that review. Currently, when an insurer sends a rate application to FSCO, it takes three to six months to get approval. You’ve got to put that three to six months in context. When you issue an insurance policy, it’s for 12 months. It is a little disquieting that it would take three to six months to get a rate approval for a product that’s 12 months. We suggest that by maybe having a lighter approach in some of the classes that I already mentioned, more resources at FSCO could focus on private passenger auto.

This would be a simplified filing process and anything that falls within that category should be presumed to be approved unless the regulator sees something that is completely out of tune and says no to it. We would suggest that this simplified process should be relatively quick, from FSCO’s standpoint, for approval. After 30 days of having sent the simplified package to FSCO, we should be deemed approved and we move on.

A full filing, which would require, then, the submission of all information, including actuarial justification, would be required for anything that is not of a maintenance nature, and this package has to be signed by an actuary.

Nadira Kanhai

On October 2, 2004, I survived a two-car collision. The auto insurance carrier required an in-home assessment for a claim for statutory accident benefits. An occupational therapist/registered nurse conducted the assessment. The report generated was inaccurate and biased and the health professional used and abused my personal health information to discredit my injuries.

My request to have the report corrected by the member was denied. The insurance adjuster utilized the report to decrease and stop benefits, ordered me to attend a functional abilities assessment by an orthopaedic surgeon. Needless to say, the orthopaedic surgeon’s report followed the identical template of minimizing, trivializing and discrediting injuries.

I reported my concerns to the respective health colleges— the College of Occupational Therapists and the College of Nurses of Ontario.

COTO conducted a mediocre investigation and issued a lame reprimand to justify to the public that some action was taken, but it did not address my issues concerning the accuracy of the report, the member’s unprofessional conduct and the impact on the vulnerable public. COTO informed me in writing that these assessments are considered non-therapeutic.

CNO dismissed my complaint on the grounds that the member was not providing nursing services and was not acting in the capacity of an RN, although this member is currently registered and holds a current licence to practise and is utilizing her credentials to augment and enhance her credibility.

A follow-up with the Office of the Information and Privacy Commissioner of Ontario concluded that this member was not acting as a health information custodian as defined under the act. Furthermore, these assessments are not conducted under the health professionals act for the purposes of providing care and are therefore deemed commercial assessments under the Insurance Act.

Please note that after all the experts paid by the insurance carrier declared me a malingerer and that my pain was subjective, a bone scan report revealed healing fractures to three of my ribs as a result of the impact from the airbag and fractures in my pelvis and symphysis as my knee went into the dashboard.

My experience clearly demonstrates that there are “trusted” health professionals, whom I prefer to call mercenaries, whose credentials and opinions are for sale.

If the government was serious about regulation of the industry and protection of the public, it would slap hefty fines on the insurance carriers, and the health colleges would discipline their members by enforcing their own standards, leading to revoked licences. However, conflict of interest is the grease that oils the wheels of the insurance giant and the financial sector of Ontario’s economy.

Speaking with One Voice
Dr. Sukhvinder Kalsi-Ryan

I am a physical therapist by training and I work in the public sector. I’m currently a post-doctoral fellow at the Toronto Western Hospital, where my area of expertise is in the development and implementation of outcome measures specific to traumatic and non-traumatic spinal cord injury.

I’ve come together, along with many other stakeholders, to join a group called Speaking with One Voice. We are essentially a group of organizations. We’ve come together to advocate for the rights of individuals who are seriously injured in car accidents. We are a multi-stakeholder group that is comprised of leading experts in the rehabilitation field, health care providers from both the public and private sectors, professional organizations, organizations that support accident victims, such as the provincial Acquired Brain Injury Network and the Ontario Brain Injury Association, the legal community, and victims from across Ontario who are deeply concerned about the pending changes to the definition of catastrophic impairment related to automobile insurance.

Our concerns are really about what the proposed changes to the catastrophic definition are. Firstly, the FSCO panel and superintendent recommend new assessment tools and new thresholds that would make it much more difficult to be deemed catastrophic. They will no longer allow designated assessors to combine both mental and physical impairments or consider chronic pain in the total-person impairment rating. This goes against the World Health Organization, the American medical guidelines protocol, best practices in care, and some recent decisions made by courts.

The superintendent has added a major barrier to access of benefits to those that are deemed catastrophic, as he suggests that only doctors should be able to sign insurance forms on an ongoing basis for therapy, equipment and support. One million people in Ontario do not have a family doctor. Those individuals will not be able to access any care.

It is our understanding that the insurance industry will continue to enjoy record profits. FSCO has recently reported that insurer accident benefit costs have plummeted by over half, from $764 to $300 per vehicle, since the minor injury guideline was introduced and the non-cat benefits were slashed back in September 2010. However, there has been no reduction in premiums.

So, essentially, we feel that the changes should not happen as yet. The recommended changes by FSCO should not be implemented at this point as these reflect the opinion of the insurance industry and are in direct opposition to the opinion of almost all stakeholder groups.

What we do recommend or what we are asking for is that the funding for those who sustain serious non-catastrophic injuries be restored as they were a casualty of the war on fraud in 2010 and are now left unprotected. This is preferable to introducing an interim category, which will only add more complexity to the system.

Debbie Thompson, independent insurance broker

Our association, the IBAO, often differs on certain policy matters with insurers, as brokers’ prime responsibility is to advocate and serve their customer, often given a different perspective from the companies themselves.

I believe that the single most important thing that could be done to lower claims costs and thus insurance premiums is to tackle fraud and abuse in Ontario’s auto insurance system, particularly in the accident benefit area.

The IBAO is a participant in the consumer engagement and education task force working group and it supports the work of the task force and its direction. The task force recommendations are scheduled to come out later this year and we want to urge the government to implement those recommendations as quickly as possible.

As mentioned, tackling fraud and abuse in auto insurance is probably the most important thing we can do to lower premiums. However, we would like to caution against any further tampering with the system in the wake of the 2010 auto reforms. We’re not here to defend insurers, but we do believe that any aggressive tampering with this system will threaten market stability, which is just getting a foothold post-reform.

In 2005, the Ontario government banned the use of credit scoring in the rating of automobile insurance. However, shortly after, many carriers began to circumvent the ban by refusing to offer quotes to those who refused access to a consumer’s credit information. By refusing to offer quotes, carriers were naturally not writing business for anyone who refused access to credit information.

In January 2009, via a bulletin from the superintendent, carriers were asked to stop this practice. After a refusal to abide by this request, the use of credit was later defined as an unfair and deceptive act or practice as part of the 2010 auto reform package, a measure we wholeheartedly support.

Ironically, however, almost immediately after the credit ban was introduced in auto, insurers began to use credit more aggressively to price people’s property insurance, once again circumventing the ban on auto.

You see, many consumers buy their home and auto together to get the discounts that are available. By using credit on home policies, some insurers are able to significantly increase premiums, sometimes as much as 100%. By directly impacting the affordability of the home policies, insurers are able once again to successfully force the policyholder to go elsewhere. The problem is that soon there won’t be an elsewhere to turn.

MPP Colle introduced Bill 108, the Homeowners Insurance Credit Scoring Ban Act. Ontario lawmakers should follow these provinces and pass Mr. Colle’s bill. A ban can also be accomplished by amending the unfair and deceptive practice—regulation under the current authority in the Insurance Act. The ban on credit in auto is done this way.

CarSharing Association
Kevin McLaughlin
Wilson Wood

Auto insurance and affordability is certainly something that we’re very concerned with. Undeniably, from our experience, the best way to dramatically reduce your auto insurance costs for the consumer in Ontario is to simply not own a car. But you can still get access to one by sharing a car, so the insurance implications move to us. We represent 40,000 people in Ontario who share a car today.

Car ownership costs you thousands of dollars a year: payments, insurance, maintenance, depreciation, all of those items. Car sharing, in turn, costs a fairly modest amount because members pay only for the hours and the kilometres that they use our vehicles.

Academic studies in Canada and the US indicate that this type of car sharing removes eight to 10 privately owned cars from our streets. This reduces pollution, parking woes and gridlock.

The Financial Service Commission of Ontario and the Insurance Bureau of Canada are silent about car sharing. We don’t exist. Car sharing through an organization or supplier is not addressed in auto insurance regulations or legislation.

Our insurance providers do provide us with auto insurance to cover our named members. They were initially quite skeptical about this new service, and some of these concerns still exist today. Sometimes, our coverage is provided to us under the personal lines, sometimes it’s under the commercial lines—there’s no set way that it’s done.

There are concerns in our industry about accident benefits. Current legislation is essentially based on the 1950s and 1960s model of car ownership: The people who drive cars are either car owners or family members of car owners. This lack of direction or clarity in the regulations puts our insurance providers and the car sharing organizations liable when a car sharing member is walking, riding a bicycle or using public transit and involved in an auto collision.