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.