Just a few steps can mean the difference between a slip-and-fall case and auto insurance accident benefits payments, as illustrated in an arbitration decision issued by the Financial Services Commission of Ontario (FSCO).
In Fee Nung Wong and St. Paul Fire & Marine Insurance Company, Fee Nung Wong sought accident benefits after she slipped and fell while getting off a motor coach owned by AZ Bus Tours and insured by St. Paul.
Wong was traveling back to Toronto from Casino Rama in the morning of Mar. 13, 2008. The bus had a number of drop-off points in Toronto, including a Kentucky Fried Chicken parking lot, which was covered in black ice.
"From the point of view of eligibility for accident benefits, the manner and timing of Ms. Wong's fall is crucial," FSCO arbitrator John Wilson wrote in his decision.
"In this matter, Ms. Wong alleges that any impairments she suffered as a result of her fall were directly caused by the use or operation of the motorcoach in which she traveled from Casino Rama to Toronto.
"St. Paul on the other hand takes the position that however unfortunate Ms. Wong may have been, she actually suffered a slip and fall on an icy parking lot that was not in the control of the operator, and which was not occasioned by the use or operation of a motor vehicle."
Testimony at the arbitration suggested Wong had slipped after she had stepped one or two metres from the bus.
"It is plausible that if Ms. Wong stumbled or tripped on the stairs of the coach, and tumbled headlong to the ground, finishing some metres away from the coach, her injuries sustained in ultimately hitting the ground could be found to arise directly from the operation of a motor vehicle - the motorcoach in this case," Wilson found.
"Such a scenario and such a conclusion would be consistent with Re Polemis. It would not, however, be consistent with the evidence in this arbitration."
Wong was therefore not entitled to accident benefits, Wilson ruled.
"There was a separation in distance and time from the disembarkation from the coach and the subsequent slip and fall," he wrote. "I find therefore that the incident that gave rise to Ms. Wong's injuries did not directly
Friday, October 29, 2010
Ontario arbitrator notes insurers must take more care in a post-DAC world
An Ontario arbitrator has granted a special award against an insurer that terminated income replacement benefits to a claimant, on the basis that the insurer uncritically relied on a vocational assessment that appeared to have been the product of what the arbitrator described as an "assessment mill."
In making his decision, Financial Services Commission of Ontario (FSCO) arbitrator John Wilson highlighted what he saw as a problem endemic ever since the dissolution of the Designated Assessment Centres (DACs) in Ontario in 2006.
"To a degree...Mr. Cowans' claims bring into question the way Motors [Insurance Corporation] and perhaps other insurers deal with the determination of entitlement to benefits in a post-DAC world, and how the system of insurer's assessments that replace the DAC system fits into such determinations," Wilson wrote.
In Everliston Cowans and Motors Insurance Corporation, Motors terminated Cowans' income replacement benefits after 104 weeks because the insurer relied on an assessment that determined "suitable employment" was available for Cowans.
Wilson found that in making this determination, the insurer did not critically analyze the contents of a medical and vocational report prepared by Health Impact Multidisciplinary Assessment Centres.
The arbitrator noted Health Impact's report did not take into account several factors, including the absence of any apparent conflict of opinion among the medical assessors; the suggestion that Cowan was suited for a job requiring a "high school" education when his vocational tests showed him at Grade 3 or 4 levels; and the unlikelihood that Cowan would ever qualify for work in the upper income range targeted by the assessment.
Extrapolating on figures provided by Health Impact, Wilson found the assessment centre would have to have been doing roughly 10 assessments per work week, allowing a maximum of only four hours to process each assessment.
Since DACs no longer make a determination about disability, but rather insurers do (based on medical reports), insurers need to look at these assessments with a more critical view, Wilson found.
"In Motors' case, delegating the investigation, unsupervised, to what seems to have been an assessment mill, and merely reciting the summary of the assessment before terminating benefits was not ‘a reasonable and competent investigation,' Wilson found.
In making his decision, Financial Services Commission of Ontario (FSCO) arbitrator John Wilson highlighted what he saw as a problem endemic ever since the dissolution of the Designated Assessment Centres (DACs) in Ontario in 2006.
"To a degree...Mr. Cowans' claims bring into question the way Motors [Insurance Corporation] and perhaps other insurers deal with the determination of entitlement to benefits in a post-DAC world, and how the system of insurer's assessments that replace the DAC system fits into such determinations," Wilson wrote.
In Everliston Cowans and Motors Insurance Corporation, Motors terminated Cowans' income replacement benefits after 104 weeks because the insurer relied on an assessment that determined "suitable employment" was available for Cowans.
Wilson found that in making this determination, the insurer did not critically analyze the contents of a medical and vocational report prepared by Health Impact Multidisciplinary Assessment Centres.
The arbitrator noted Health Impact's report did not take into account several factors, including the absence of any apparent conflict of opinion among the medical assessors; the suggestion that Cowan was suited for a job requiring a "high school" education when his vocational tests showed him at Grade 3 or 4 levels; and the unlikelihood that Cowan would ever qualify for work in the upper income range targeted by the assessment.
Extrapolating on figures provided by Health Impact, Wilson found the assessment centre would have to have been doing roughly 10 assessments per work week, allowing a maximum of only four hours to process each assessment.
Since DACs no longer make a determination about disability, but rather insurers do (based on medical reports), insurers need to look at these assessments with a more critical view, Wilson found.
"In Motors' case, delegating the investigation, unsupervised, to what seems to have been an assessment mill, and merely reciting the summary of the assessment before terminating benefits was not ‘a reasonable and competent investigation,' Wilson found.
Bad faith no longer necessary for monetary awards for breach of Charter rights: Supreme Court of Canada
Bad faith is no longer a necessary requirement for awarding monetary damages for the breach of a Charter right following a recent Supreme Court of Canada decision, Blaney McMurtry LLP reported in its Insurance Observer.
In Vancouver (City) v Ward, a unanimous Supreme Court of Canada upheld a damages award for an unconstitutional strip search and vehicle seizure, absent bad faith on the part of the police, wrote Rafal Szymanski, a member of Blaney McMurty's insurance defence group, in the article Absense of Malice: Charter Damages Redefined.
In Ward, Vancouver police acted on a tip that an unknown individual planned to throw a pie at then Prime Minister Jean Chretien during a public appearance.
Ward was mistakenly identified as the suspect and arrested. In custody, police strip searched him, but did not as him to remove his underwear, not was he touched by the officers. His car was impounded, with the intention of obtaining a search warrant.
When it was determined that there were no grounds for a warrant and there was insufficient evidence to support a charge, he was released, wrote Szymanski.
Ward brought an action in tort and for breach of his Charter right. The lower court held that there was no tort liability, but that his section 8 Charter right to be free from unreasonable search and seizure had indeed been violated. Damage for the breach was set in the amount of $100 for the seizure of the car and $5,0000 for the strip search.
The Supreme Court of Canada confirmed the trial judge's award, deeming them to be "appropriate and just both from the perspective of the plaintiff and the defendant," wrote Szymanski.
"With Ward, the Supreme Court of Canada has provided plaintiffs with an avenue to prosecute government entities for monetary relief, even where such entities were not acting in bad faith," wrote Szymanski. "This will no doubt lead to an increase in litigation.
In Vancouver (City) v Ward, a unanimous Supreme Court of Canada upheld a damages award for an unconstitutional strip search and vehicle seizure, absent bad faith on the part of the police, wrote Rafal Szymanski, a member of Blaney McMurty's insurance defence group, in the article Absense of Malice: Charter Damages Redefined.
In Ward, Vancouver police acted on a tip that an unknown individual planned to throw a pie at then Prime Minister Jean Chretien during a public appearance.
Ward was mistakenly identified as the suspect and arrested. In custody, police strip searched him, but did not as him to remove his underwear, not was he touched by the officers. His car was impounded, with the intention of obtaining a search warrant.
When it was determined that there were no grounds for a warrant and there was insufficient evidence to support a charge, he was released, wrote Szymanski.
Ward brought an action in tort and for breach of his Charter right. The lower court held that there was no tort liability, but that his section 8 Charter right to be free from unreasonable search and seizure had indeed been violated. Damage for the breach was set in the amount of $100 for the seizure of the car and $5,0000 for the strip search.
The Supreme Court of Canada confirmed the trial judge's award, deeming them to be "appropriate and just both from the perspective of the plaintiff and the defendant," wrote Szymanski.
"With Ward, the Supreme Court of Canada has provided plaintiffs with an avenue to prosecute government entities for monetary relief, even where such entities were not acting in bad faith," wrote Szymanski. "This will no doubt lead to an increase in litigation.
Psychological and physical injuries cannot be combined to determine catastrophic impairment: Ontario Superior Court
Percentage determinations of psychological impairments cannot be added to percentage determinations of physical impairments to determine whether or not a person has suffered a whole person ‘catastrophic impairment' under the Statutory Accidents Benefits Schedule (SABS), the Ontario Superior Court of Justice has found.
S. 43, Clause 2(1.1)(f) of the SABS states a person has suffered a catastrophic injury if: "an impairment or combination of impairments...in accordance with the American Medical Association's Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in 55 per cent or more impairment of the whole person."
Courts and arbitrators are frequently asked to combine percentage-based determinations of physical and psychological impairments to arrive at a conclusion that a person had met the 55% threshold of a catastrophic impairment.
But in Kusnierz v. The Economical Mutual Insurance Company, released on Oct. 19, 2010, the Ontario Superior Court says this type of combination of psychological and physical impairments cannot be done.
"I find that it is not permissible under the SABS to assign percentage values to mental and behavioural disorders under Chapter 14 of the Guides...and then combine them with the percentage values derived from impairments assessed under the other chapters of the Guides (referred to in clause 2(1.1)(f) of the SABS) in determining whether an individual meets the catastrophic impairment threshold of "55 per cent or more impairment of the whole person," Ontario Superior Court Justice Peter Lauwers wrote in his decision.
"I reach this conclusion for the following reasons, in a nutshell:
"(i) The Guides deliberately do not permit the mental and behavioural disorders in Chapter 14 to be assessed in percent terms and combined with the percentage values derived from impairments assessed under the other chapters of the Guides for the purpose of determining whole person impairment;
(ii) The structure of the SABS reinforces the bright line demarcation between mental and behavioural disorders referred to in Chapter 14 of the AMA Guides - specifically referred to in clause 2(1.1)(g) of the SABS - from the impairments assessed under the other chapters of the Guides which are referred to in clause 2(1.1)(f) of the SABS; and
(iii) This interpretation is consistent with the purpose of the specific provisions of Bill 59 and the SABS that this issue engages."
George Cooke, president and CEO of The Dominion of Canada General Insurance Company, praised the ruling during the Insurance Brokers Association of Ontario (IBAO)'s 90th Annual Convention in Niagara Falls. But it does seem likely, based on the importance of the ruling to the industry, that the decision will be appealed.
S. 43, Clause 2(1.1)(f) of the SABS states a person has suffered a catastrophic injury if: "an impairment or combination of impairments...in accordance with the American Medical Association's Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in 55 per cent or more impairment of the whole person."
Courts and arbitrators are frequently asked to combine percentage-based determinations of physical and psychological impairments to arrive at a conclusion that a person had met the 55% threshold of a catastrophic impairment.
But in Kusnierz v. The Economical Mutual Insurance Company, released on Oct. 19, 2010, the Ontario Superior Court says this type of combination of psychological and physical impairments cannot be done.
"I find that it is not permissible under the SABS to assign percentage values to mental and behavioural disorders under Chapter 14 of the Guides...and then combine them with the percentage values derived from impairments assessed under the other chapters of the Guides (referred to in clause 2(1.1)(f) of the SABS) in determining whether an individual meets the catastrophic impairment threshold of "55 per cent or more impairment of the whole person," Ontario Superior Court Justice Peter Lauwers wrote in his decision.
"I reach this conclusion for the following reasons, in a nutshell:
"(i) The Guides deliberately do not permit the mental and behavioural disorders in Chapter 14 to be assessed in percent terms and combined with the percentage values derived from impairments assessed under the other chapters of the Guides for the purpose of determining whole person impairment;
(ii) The structure of the SABS reinforces the bright line demarcation between mental and behavioural disorders referred to in Chapter 14 of the AMA Guides - specifically referred to in clause 2(1.1)(g) of the SABS - from the impairments assessed under the other chapters of the Guides which are referred to in clause 2(1.1)(f) of the SABS; and
(iii) This interpretation is consistent with the purpose of the specific provisions of Bill 59 and the SABS that this issue engages."
George Cooke, president and CEO of The Dominion of Canada General Insurance Company, praised the ruling during the Insurance Brokers Association of Ontario (IBAO)'s 90th Annual Convention in Niagara Falls. But it does seem likely, based on the importance of the ruling to the industry, that the decision will be appealed.
Tuesday, October 19, 2010
FSCO lays out process for making arbitration decision public
The Financial Services Commission of Ontario (FSCO) has outlined a process that an insurer must follow when it makes public an arbitrator's decision regarding benefits in the company's dispute with another insurer.
In May 2010, FSCO announced that for accidents that occur on or after Sept. 1, 2010, insurers found by an arbitrator to be liable to pay benefits in disputes with other insurers would be required to make the arbitrator's decision public.
FSCO is establishing and will be making available a centralized database that includes decisions of all privately arbitrated disputes between insurers, pursuant to Ontario Regulation 283/95, a FSCO Auto Bulletin says.
Within 15 days of receipt of a decision from an arbitrator, the liable insurer is to provide FSCO with a copy of the decision in electronic format (Mircrosoft Word) and in PDF format (not scanned).
The electronic documents are to be accompanied by an electronic copy of the attached form of ‘Insurer Remittance Form for Disputes Between Insurers Arbitration Decisions.'
Insurers are to email the documents to DBIDecisions@fsco.gov.on.ca
FSCO adds that insurers are invited to forward appeal decisions to FSCO when they are received. "This will assist FSCO in ensuring that its database contains both decisions and appeal decisions for the convenience of interested parties."
In May 2010, FSCO announced that for accidents that occur on or after Sept. 1, 2010, insurers found by an arbitrator to be liable to pay benefits in disputes with other insurers would be required to make the arbitrator's decision public.
FSCO is establishing and will be making available a centralized database that includes decisions of all privately arbitrated disputes between insurers, pursuant to Ontario Regulation 283/95, a FSCO Auto Bulletin says.
Within 15 days of receipt of a decision from an arbitrator, the liable insurer is to provide FSCO with a copy of the decision in electronic format (Mircrosoft Word) and in PDF format (not scanned).
The electronic documents are to be accompanied by an electronic copy of the attached form of ‘Insurer Remittance Form for Disputes Between Insurers Arbitration Decisions.'
Insurers are to email the documents to DBIDecisions@fsco.gov.on.ca
FSCO adds that insurers are invited to forward appeal decisions to FSCO when they are received. "This will assist FSCO in ensuring that its database contains both decisions and appeal decisions for the convenience of interested parties."
Friday, October 15, 2010
Ontario court delves into the timing of threshold motions during jury trials
Ontario's courts seem to be in a quandary about the timing of hearing a threshold motion in a jury trial.
A threshold motion under s. 276.5(15) of the Insurance Act determines whether an auto injury is "serious or permanent."
The quandary is this: If the threshold motion is heard and decided before a jury renders a verdict, then it could be argued the jury's work is for naught. On the other hand, if the judge waits until the jury reaches a verdict on damages, will the jury's decision influence the judge's decision on the threshold motion?
In Clark v. Zigrossi, released in October 2010, Ontario Superior Court Justice David M. Brown argued in favour of refraining from hearing a threshold motion until the jury had returned with its verdict.
As it happened, the jury came back with a verdict of $5,000 in damages to the plaintiff, which was reduced to zero by the $15,000 deductible automatically subtracted from trial awards.
"I do not regard a threshold motion...as an opportunity to take an indirect run at the jury's verdict," Brown wrote.
"To decide a threshold motion before a jury returns with its verdict risks undermining the important role played by civil juries in this province," Brown wrote elsewhere in the reasons. "To decide a threshold motion before the jury delivers its verdict strikes me as inconsistent with such an exhortation [to the juries to approach their jobs with diligence and care] and as disrespectful of the place of juries in our civil trial system."
A threshold motion under s. 276.5(15) of the Insurance Act determines whether an auto injury is "serious or permanent."
The quandary is this: If the threshold motion is heard and decided before a jury renders a verdict, then it could be argued the jury's work is for naught. On the other hand, if the judge waits until the jury reaches a verdict on damages, will the jury's decision influence the judge's decision on the threshold motion?
In Clark v. Zigrossi, released in October 2010, Ontario Superior Court Justice David M. Brown argued in favour of refraining from hearing a threshold motion until the jury had returned with its verdict.
As it happened, the jury came back with a verdict of $5,000 in damages to the plaintiff, which was reduced to zero by the $15,000 deductible automatically subtracted from trial awards.
"I do not regard a threshold motion...as an opportunity to take an indirect run at the jury's verdict," Brown wrote.
"To decide a threshold motion before a jury returns with its verdict risks undermining the important role played by civil juries in this province," Brown wrote elsewhere in the reasons. "To decide a threshold motion before the jury delivers its verdict strikes me as inconsistent with such an exhortation [to the juries to approach their jobs with diligence and care] and as disrespectful of the place of juries in our civil trial system."
Tuesday, October 5, 2010
Cooperation among insurers is the key to fighting fraud: special investigator
Cooperation between insurers is the key to a successful automobile fraud investigation, according to Rick Muir, senior special investigator with Desjardins General Insurance Group, The Personal and Certas Direct Insurance Companies.
Right now, however, many insurers are going at it alone, worrying about implications of things such as the Personal Information Protection and Electronic Documents Act (PIPEDA), Muir told delegates at the Annual Toronto Fraud Forum on Sept. 29.
"Do like the police do, and combine forces," he advised the insurance industry. "We're fighting organized crime and we're standing alone.
"Don't be putting up barriers like PIPEDA in front of you. Do your job, nobody is going to touch you. Just know what you have in your hand."
Preserving evidence is also key, he added. This requires early recognition of a potential issue.
"Get your hands on those cars as quickly as you can - they are your dead body," Muir said, using an analogy drawn from his previous career in criminal investigations with the Ontario Provincial Province. "As a dead body decomposes, it is harder to put a case back together."
The same goes for cars, the longer you wait to review the evidence, the more likely repairs will have been made to the vehicle.
Always assess the evidence in totality, he cautioned.
It is essential to compare the accident reconstruction report with the forensic component, and then compare each with the witness and claimant statements.
"It should match," he said. "If it matches, they are telling you the truth. If it doesn't, you've got yourself a fraud. Deny it [the claim]."
Right now, however, many insurers are going at it alone, worrying about implications of things such as the Personal Information Protection and Electronic Documents Act (PIPEDA), Muir told delegates at the Annual Toronto Fraud Forum on Sept. 29.
"Do like the police do, and combine forces," he advised the insurance industry. "We're fighting organized crime and we're standing alone.
"Don't be putting up barriers like PIPEDA in front of you. Do your job, nobody is going to touch you. Just know what you have in your hand."
Preserving evidence is also key, he added. This requires early recognition of a potential issue.
"Get your hands on those cars as quickly as you can - they are your dead body," Muir said, using an analogy drawn from his previous career in criminal investigations with the Ontario Provincial Province. "As a dead body decomposes, it is harder to put a case back together."
The same goes for cars, the longer you wait to review the evidence, the more likely repairs will have been made to the vehicle.
Always assess the evidence in totality, he cautioned.
It is essential to compare the accident reconstruction report with the forensic component, and then compare each with the witness and claimant statements.
"It should match," he said. "If it matches, they are telling you the truth. If it doesn't, you've got yourself a fraud. Deny it [the claim]."
Insurers urged to get written conflict-of-interest statements from law firms and treatment/assessment facilities
Insurers wishing to expose potential insurance fraud should be getting written conflict-of-interest statements from legal, treatment and assessment facilities, a fraud investigator suggests.
Donna Ford, an insurance fraud investigator with Northwood & Associates, addressed the topic of insurance fruad at the Annual Toronto Fraud Forum on Sept. 29.
The Association of Certified Fraud Examiners and the Canadian Association of Special Investigation Units jointly sponsored the meeting.
In an email exchange following the forum, Ford observed that under the previous SABS, there was a conflict of interest disclosure section in the Treatment Plans (OCF 18 and 23). Although there is no such disclosure section on the forms under the new SABS, she wrote, there is still a requirement to disclose any conflict of interest to the insurer.
"If the insurer is noticing patterns of claimants going to the same combination of legal representatives, treatment facilities or assessment facilities, I suggest the insurer write to all three and ask if there is any conflict of interest," Ford writes.
Those letters should be produced at arbitration and trial, especially if there is no response, Ford said.
Insurers should also provide this information to the Investigation Services Division (ISD) of the Insurance Bureau of Canada (IBC) to investigate any undisclosed conflicts.
"We all know that conflicts lead to over-treatment and over-billing."
Donna Ford, an insurance fraud investigator with Northwood & Associates, addressed the topic of insurance fruad at the Annual Toronto Fraud Forum on Sept. 29.
The Association of Certified Fraud Examiners and the Canadian Association of Special Investigation Units jointly sponsored the meeting.
In an email exchange following the forum, Ford observed that under the previous SABS, there was a conflict of interest disclosure section in the Treatment Plans (OCF 18 and 23). Although there is no such disclosure section on the forms under the new SABS, she wrote, there is still a requirement to disclose any conflict of interest to the insurer.
"If the insurer is noticing patterns of claimants going to the same combination of legal representatives, treatment facilities or assessment facilities, I suggest the insurer write to all three and ask if there is any conflict of interest," Ford writes.
Those letters should be produced at arbitration and trial, especially if there is no response, Ford said.
Insurers should also provide this information to the Investigation Services Division (ISD) of the Insurance Bureau of Canada (IBC) to investigate any undisclosed conflicts.
"We all know that conflicts lead to over-treatment and over-billing."
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