A Peel Regional Police Officer has been arrested in Brampton following a fraud investigation into staged motor vehicle collisions.
With the assistance of the Insurance Bureau of Canada, investigators with the Internal Affairs Bureau conducted an investigation into a series of motor vehicle collisions that occurred in 2010.
The alleged fraud involved the staging of motor vehicle collisions followed by insurance claims for damaged vehicles and injuries sustained during the impact. It is alleged an officer facilitated the reporting of the accidents as legitimate collisions.
These allegations have not been proven in court.
Officers from the Internal Affairs Bureau arrested and charged Peel Regional Police Constable Carlton Watson, an 18-year veteran, on Apr. 14, 2011.
Watson is charged with uttering a fraudulent document, obstructing justice and breach of trust. He is suspended with pay and will remain on suspension pending the completion of court proceedings.
Investigators have also arrested Wayne Isaacs, a 46-year-old resident of Brampton, charging him with defrauding the public.
The investigation is ongoing. Both men are scheduled to appear before the Ontario Court of Justice in Brampton, on May 16, 2011.
Tuesday, April 19, 2011
Ontario arbitrator says AB insurer must pay full cost of expert report used in both accident benefits and tort proceedings
An Ontario arbitrator has ordered an insurer to pay for the full cost of an expert report even though the report was also being used in a related tort case.
In Sanmuganathan Elaiathamby v. State Farm Mutual Automobile Insurance Company, Elaiathamby claimed $8,505.42 for expert reports and disbursements at a Financial Securities Commission of Ontario (FSCO) expense hearing related to his accident benefits claim.
At the expense hearing, a FSCO arbitrator awarded only $6,289.68 for the expert reports and disbursements. The arbitrator allowed only one half of the cost of reports by four experts (two of them doctors), whose reports were also being used in a related tort case.
The decision at the expense hearing was overturned on appeal.
In his appeal decision, FSCO Director's Delegate David Evans said the original decision to half the expenses on the basis of their use in a tort case was "without reference to case law or legislation."
Evans noted that Subsection 282(11) of the Insurance Act provides that all or part of the expenses incurred in an arbitration may be awarded based on prescribed criteria set out in s.12(2) of Reg 664, R.R.O. 1990. "Those criteria do not include whether a party may potentially be entitled to recover a portion of his or her expenses in another proceeding [such a tort case]," he wrote.
State Farm argued that allowing only half of the disbursements would prevent "double recovery." This describes a situation in which the accident benefits carrier and the tort insurer each pay the full cost of an expert report used in both accident benefits and tort proceedings.
"However, the arbitration and appeal decisions are public, so there is no reason to assume there would be double recovery, even aside from the assumption that counsel will act honorably," Evans countered. "Finally, while the automobile insurer is the insurer or last resort, that does not apply to legal expenses incurred in arbitration."
In Sanmuganathan Elaiathamby v. State Farm Mutual Automobile Insurance Company, Elaiathamby claimed $8,505.42 for expert reports and disbursements at a Financial Securities Commission of Ontario (FSCO) expense hearing related to his accident benefits claim.
At the expense hearing, a FSCO arbitrator awarded only $6,289.68 for the expert reports and disbursements. The arbitrator allowed only one half of the cost of reports by four experts (two of them doctors), whose reports were also being used in a related tort case.
The decision at the expense hearing was overturned on appeal.
In his appeal decision, FSCO Director's Delegate David Evans said the original decision to half the expenses on the basis of their use in a tort case was "without reference to case law or legislation."
Evans noted that Subsection 282(11) of the Insurance Act provides that all or part of the expenses incurred in an arbitration may be awarded based on prescribed criteria set out in s.12(2) of Reg 664, R.R.O. 1990. "Those criteria do not include whether a party may potentially be entitled to recover a portion of his or her expenses in another proceeding [such a tort case]," he wrote.
State Farm argued that allowing only half of the disbursements would prevent "double recovery." This describes a situation in which the accident benefits carrier and the tort insurer each pay the full cost of an expert report used in both accident benefits and tort proceedings.
"However, the arbitration and appeal decisions are public, so there is no reason to assume there would be double recovery, even aside from the assumption that counsel will act honorably," Evans countered. "Finally, while the automobile insurer is the insurer or last resort, that does not apply to legal expenses incurred in arbitration."
FSCO's expert panel says 'no' to combining physical and psychological in catastrophic impairment designations
Physical and psychological impairments should not be combined for the purpose of catastrophic determination, according to an expert panel appointed by the Financial Services Commission of Ontario (FSCO) to draft a new definition of catastrophic impairment.
The FSCO panel released its draft report, part of the province's auto insurance reform package, on Apr. 15, 2011. Stakeholders have until May 13 to submit their comments on the draft report.
"The expert panel did not find that combining physical and mental/behavioural conditions can be achieved in a valid and reliable way with the currently available methods of impairment cross-rating," the report says.
"The panel had difficulty understanding how combinations of physical impairments and psychological conditions that independently do not meet the criteria outlined in the revised version of 2(e) and 2(f) could be equated to a severe injury to the brain or, spinal cord, or to blindness."
The panel suggested further research is needed in order to draft a clinically comparable combined psycho-physical whole person impairment threshold that corresponds to the currently accepted physical threshold.
"Therefore, until further scientific evidence is gained, we recommend that separate criteria and methods of evaluation be used for the determination of catastrophic impairment and that physical and psychiatric impairments not be combined for the purpose of catastrophic determination," the report says.
Also among its recommendations, the panel suggested an "interim" status be established to allow insureds with traumatic brain injuries and major physical impairments to obtain immediate access to rehabilitation services.
The FSCO panel released its draft report, part of the province's auto insurance reform package, on Apr. 15, 2011. Stakeholders have until May 13 to submit their comments on the draft report.
"The expert panel did not find that combining physical and mental/behavioural conditions can be achieved in a valid and reliable way with the currently available methods of impairment cross-rating," the report says.
"The panel had difficulty understanding how combinations of physical impairments and psychological conditions that independently do not meet the criteria outlined in the revised version of 2(e) and 2(f) could be equated to a severe injury to the brain or, spinal cord, or to blindness."
The panel suggested further research is needed in order to draft a clinically comparable combined psycho-physical whole person impairment threshold that corresponds to the currently accepted physical threshold.
"Therefore, until further scientific evidence is gained, we recommend that separate criteria and methods of evaluation be used for the determination of catastrophic impairment and that physical and psychiatric impairments not be combined for the purpose of catastrophic determination," the report says.
Also among its recommendations, the panel suggested an "interim" status be established to allow insureds with traumatic brain injuries and major physical impairments to obtain immediate access to rehabilitation services.
Monday, April 11, 2011
Entitlement to optional benefits under Ontario auto reforms could expose weakness in communication between consumers-brokers
If an auto insurance consumer in Ontario purchases optional benefits under the province's new auto insurance regime, that doesn't mean the policyholder is entitled to such benefits if they suffer a minor injury arising out of a motor vehicle accident.
A misunderstanding around this point may lead to prickly communications in the future between brokers and consumers, a panel of speakers told the 2011 CIP Society Symposium in Toronto on Apr. 6.
Panelist Jim Cameron, president of Cameron & Associates Insurance Consultants Ltd., noted in his presentation that caregiving and housekeeping benefits are no longer mandatory auto insurance benefits, but optional benefits. This is one of the changes made in the auto insurance reforms Ontario introduced on Sept. 1, 2010.
"The problem being that people buy it as an optional benefit, that doesn't mean you are entitled to it," said Cameron. "You have to have a [more serious] injury than a minor injury in order to qualify, even though you purchased the product. It could be a tough sell. We haven't really seen that come out yet."
Kadey Schultz, partner at Hughes Amys LLP, flagged this as an issue for broker-client communications.
"This is going to be an issue for conflict resolution between brokers and clients down the road," Schultz predicted. "Because someone is going to speak with their broker, find out what optional benefits they want or need, purchase those optional benefits.
"And [then], one year or two years down the road, they [might] get in an accident, they will think they are automatically entitled to these coverages, but they will have to meet the medical test for entitlement. So then there's going to be a big fight with the broker about the level of communication -
"You never told me," chimed in panelist Hugh Fardy, senior vice president of the CG&B Group Inc., mimicking what a consumer might say to the broker in that situation.
"It is going to create a conflict and probably within a year we'll start to see that emerge," Schultz continued.
The issue prompted subsequent discussion between the panelists and the audience about the public's take-up of optional benefits.
Joel Baker, president of MSA Research, made an observation as an audience member. He said he had spoken recently with two insurers, one operating in the direct channel and the other operating in the broker channel.
According to Baker, the insurer representatives told him the take-up on the optional benefits at their companies was only 3-5%.
Fardy said the take-up depends on the area and upon how aggressively the options are sold. He said in some areas, the take-up percentage on optional benefits is more in the territory of between 9% and 10%
A misunderstanding around this point may lead to prickly communications in the future between brokers and consumers, a panel of speakers told the 2011 CIP Society Symposium in Toronto on Apr. 6.
Panelist Jim Cameron, president of Cameron & Associates Insurance Consultants Ltd., noted in his presentation that caregiving and housekeeping benefits are no longer mandatory auto insurance benefits, but optional benefits. This is one of the changes made in the auto insurance reforms Ontario introduced on Sept. 1, 2010.
"The problem being that people buy it as an optional benefit, that doesn't mean you are entitled to it," said Cameron. "You have to have a [more serious] injury than a minor injury in order to qualify, even though you purchased the product. It could be a tough sell. We haven't really seen that come out yet."
Kadey Schultz, partner at Hughes Amys LLP, flagged this as an issue for broker-client communications.
"This is going to be an issue for conflict resolution between brokers and clients down the road," Schultz predicted. "Because someone is going to speak with their broker, find out what optional benefits they want or need, purchase those optional benefits.
"And [then], one year or two years down the road, they [might] get in an accident, they will think they are automatically entitled to these coverages, but they will have to meet the medical test for entitlement. So then there's going to be a big fight with the broker about the level of communication -
"You never told me," chimed in panelist Hugh Fardy, senior vice president of the CG&B Group Inc., mimicking what a consumer might say to the broker in that situation.
"It is going to create a conflict and probably within a year we'll start to see that emerge," Schultz continued.
The issue prompted subsequent discussion between the panelists and the audience about the public's take-up of optional benefits.
Joel Baker, president of MSA Research, made an observation as an audience member. He said he had spoken recently with two insurers, one operating in the direct channel and the other operating in the broker channel.
According to Baker, the insurer representatives told him the take-up on the optional benefits at their companies was only 3-5%.
Fardy said the take-up depends on the area and upon how aggressively the options are sold. He said in some areas, the take-up percentage on optional benefits is more in the territory of between 9% and 10%
Four charged in insurance scam
The Essex County has arrested and charged four people involved in an insurance scam.
The Criminal Investigations Unit has completed an investigation into an arson which occurred in Kingsville in November of 2000.
The charges have not yet been proven in a court.
According to the investigation, the homeowner, along with two other individuals, allegedly planned to burn down the residence as a means to collect insurance proceeds.
Four people have been charged with arson for fraudulent purpose and fraud over $5,000.
The Criminal Investigations Unit has completed an investigation into an arson which occurred in Kingsville in November of 2000.
The charges have not yet been proven in a court.
According to the investigation, the homeowner, along with two other individuals, allegedly planned to burn down the residence as a means to collect insurance proceeds.
Four people have been charged with arson for fraudulent purpose and fraud over $5,000.
Thursday, March 31, 2011
Ontario insurance regulator outlines insurers' rights and responsibilities in curbing "questionable or abusive claims"
Ontario's insurance regulator, the Financial Services Commission of Ontario (FSCO), has issued a bulletin outlining an insurer's "rights and responsibilities to challenge questionable or abusive claims."
The bulletin comes in the wake of the province's auto insurance reforms, implemented on Sept. 1, 2010.
"FSCO is monitoring on an ongoing basis the interpretation and application of the SABS and associated guidelines by its stakeholders, with a view to identifying and responding to actions that are inconsistent with the recent auto reforms," the regulator says in its bulletin.
"FSCO recognizes that an overwhelming majority of stakeholders are fair and responsible participants in the auto insurance system. However, FSCO is also aware that a small group of service providers and representatives continue to abuse the system."
FSCO outlines several areas of concern, including:
1) It notes the new SABS introduced an interim Minor Injury Guideline (MIG), which defines "minor injuries" as one or more of a sprain, strain, whiplash associated disorder, contusion, abrasion, laceration or subluxation and includes any clinically associated sequelae to such an injury.
All persons with minor injuries fall under the MIG, with limited exceptions, including if compelling evidence demonstrates that a pre-existing condition will prevent that person from achieving maximal recovery if he or she is limited to MIG treatment.
"It appears that some providers are requesting approval for treatment of minor injuries on a Treatment and Assessment Plan (OCF-18) rather than providing pre-approved treatment under the MIG by submitting a Treatment Confirmation Form (OCF-23)," FSCO notes.
"The auto reforms are still fairly new and not all providers are familiar with the minor injury definition and the MIG.
"In particular, not all providers are aware that the existence of other injuries and conditions will not necessarily bring a claimant outside the MIG if the predominant impairment falls under the minor injury definition."
Insurers have a role to educate health care providers on the new MIG, FSCO noted, adding most already perform this role.
2) FSCO notes a few health care providers are flooding insurers with treatment plans.
"It appears that a small number of providers engage in the practice of flooding insurers with multiple versions of similar or identical treatment and assessment plans (OCF-18s) in an apparent attempt to overwhelm adjusters," the FSCO bulletin says. "In many cases it appears that the objective is to cause adjusters to miss the approval timelines set out in the SABS.
"This type of behaviour is clearly inappropriate."
FSCO notes an insurer is not obligated to undertake an assessment for each treatment or assessment request.
The bulletin comes in the wake of the province's auto insurance reforms, implemented on Sept. 1, 2010.
"FSCO is monitoring on an ongoing basis the interpretation and application of the SABS and associated guidelines by its stakeholders, with a view to identifying and responding to actions that are inconsistent with the recent auto reforms," the regulator says in its bulletin.
"FSCO recognizes that an overwhelming majority of stakeholders are fair and responsible participants in the auto insurance system. However, FSCO is also aware that a small group of service providers and representatives continue to abuse the system."
FSCO outlines several areas of concern, including:
1) It notes the new SABS introduced an interim Minor Injury Guideline (MIG), which defines "minor injuries" as one or more of a sprain, strain, whiplash associated disorder, contusion, abrasion, laceration or subluxation and includes any clinically associated sequelae to such an injury.
All persons with minor injuries fall under the MIG, with limited exceptions, including if compelling evidence demonstrates that a pre-existing condition will prevent that person from achieving maximal recovery if he or she is limited to MIG treatment.
"It appears that some providers are requesting approval for treatment of minor injuries on a Treatment and Assessment Plan (OCF-18) rather than providing pre-approved treatment under the MIG by submitting a Treatment Confirmation Form (OCF-23)," FSCO notes.
"The auto reforms are still fairly new and not all providers are familiar with the minor injury definition and the MIG.
"In particular, not all providers are aware that the existence of other injuries and conditions will not necessarily bring a claimant outside the MIG if the predominant impairment falls under the minor injury definition."
Insurers have a role to educate health care providers on the new MIG, FSCO noted, adding most already perform this role.
2) FSCO notes a few health care providers are flooding insurers with treatment plans.
"It appears that a small number of providers engage in the practice of flooding insurers with multiple versions of similar or identical treatment and assessment plans (OCF-18s) in an apparent attempt to overwhelm adjusters," the FSCO bulletin says. "In many cases it appears that the objective is to cause adjusters to miss the approval timelines set out in the SABS.
"This type of behaviour is clearly inappropriate."
FSCO notes an insurer is not obligated to undertake an assessment for each treatment or assessment request.
Friday, March 11, 2011
'Funds withheld' arrangements for unlicensed insurance: a possible alternative to reinsurance security agreements?
In an article outlining Canada's new requirement for reinsurance security agreements when using unlicensed reinsurance, McMillan LLP has raised the alternative possibility of administering an unlicensed reinsurance agreement on a "funds withheld" basis instead.
Canada's solvency regulator, the Office of the Superintendent of Financial Institutions (OSFI), has changed the mechanism by which Canadian insurers are allowed capital or asset credit for reinsurance placed with non-Canadian licensed insurers.
Previously, collateral arrangements for unlicensed reinsurance took the form of a reinsurance trust agreement between a cedant insurer and an unlicensed reinsurer, as prescribed by OSFI.
Now, however, the regulator is calling for trust arrangements to be replaced by reinsurance security agreements. These security agreements are to be vouchsafed by a legal opinion.
In an article for the International Law Office, McMillan LLP suggested the possibility of collapsing the trust arrangement and administering the reinsurance on a "funds withheld" basis instead.
"OSFI's related new guidance on reinsurance generally contemplates these arrangements, but cautions that the reinsurance agreement must clearly state that in the event of an insolvency of the ceding insurer or the reinsurer, the funds withheld (minus the amount properly due to the reinsurer) form the property under the cedant under applicable Canadian insurance law," McMillan LLP writes. "This appears to be a matter of legal drafting and as yet OSFI has not stated that a legal opinion confirming the legal effect of the wording will be required.
"However, it is uncertain whether this type of legal arrangement could have a regulatory impact on the reinsurer."
McMillan LLP suggests getting in touch with OSFI before attempting such an alternative arrangement.
Canada's solvency regulator, the Office of the Superintendent of Financial Institutions (OSFI), has changed the mechanism by which Canadian insurers are allowed capital or asset credit for reinsurance placed with non-Canadian licensed insurers.
Previously, collateral arrangements for unlicensed reinsurance took the form of a reinsurance trust agreement between a cedant insurer and an unlicensed reinsurer, as prescribed by OSFI.
Now, however, the regulator is calling for trust arrangements to be replaced by reinsurance security agreements. These security agreements are to be vouchsafed by a legal opinion.
In an article for the International Law Office, McMillan LLP suggested the possibility of collapsing the trust arrangement and administering the reinsurance on a "funds withheld" basis instead.
"OSFI's related new guidance on reinsurance generally contemplates these arrangements, but cautions that the reinsurance agreement must clearly state that in the event of an insolvency of the ceding insurer or the reinsurer, the funds withheld (minus the amount properly due to the reinsurer) form the property under the cedant under applicable Canadian insurance law," McMillan LLP writes. "This appears to be a matter of legal drafting and as yet OSFI has not stated that a legal opinion confirming the legal effect of the wording will be required.
"However, it is uncertain whether this type of legal arrangement could have a regulatory impact on the reinsurer."
McMillan LLP suggests getting in touch with OSFI before attempting such an alternative arrangement.
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