Lawyers Distressed Over Insurance Reforms
But silver lining for legal profession as clients need more advice.
The latest round of automobile insurance reforms has introduced big cuts to medical, rehabilitation and attendant-care limits; the removal of housekeeping and caregiver
expenses; and the capping of assessment fees and treatment costs for minor injuries. But with only a promise to keep premium increases in check, personal injury lawyers say an unfair playing field is tilting even further away from the innocent and injured.
As of Sept. 1, the reforms reduced coverage for medical and rehabilitation limits in half to $50,000 from $100,000. Attendant-care coverage for non-catastrophic injuries is now
$36,000, down from $72,000. Housekeeping and caregiver expenses are gone unless the injuries are catastrophic. In addition, treatment costs for minor injuries are now subject to a $3,500 cap, a cut from the previous $100,000.
Not surprisingly, those who spend their days fighting for injured plaintiffs have plenty to say about the reforms. Lawrence Hatfield of Flaherty Sloan Hatfield in Hamilton, Ont., quickly sums up the changes. “We’re still paying the same amount of money but getting much less product,” he says. “You can maintain the same coverage but you actually have to ask for it, and it costs more.”
Greg Monforton, an insurance lawyer in Windsor, Ont., compares the situation to getting a cheap hamburger for the price of top-grade steak. “With each no-fault successive regime since 1990 the government of Ontario has in effect placed an armed guard at the courthouse door to keep out the majority of people injured in car accidents in Ontario, and the most recent changes arm the guard even further,” he says, noting he believes the changes are discriminatory against those who can’t afford optional coverage and vulnerable people like children and pedestrians. “Every time there’s a new set of reforms, there’s a winner and a loser. The winner is certainly not the Ontario public.”
Nevertheless, there’s been little reaction to the reforms. Brian Goldfinger of Goldfinger Personal Injury Law is frustrated by the apathy surrounding the issue. “If the government doubled the price of gasoline when there’s no world war, no gas shortage, and no crisis, people would go berserk,” he says. “If they did it just so the industry could protect its bottom line, people would be outraged. But it’s too late for outrage.”
Goldfinger blames the lack of interest on the complexity and dullness of the laws on the subject. “Insurance law is so dense, so thick, and so complicated that the changes don’t even come in the Insurance Act anymore. They come in schedules that are like acts in themselves. Considering that every car driver must have car insurance, the Insurance Act should be understandable by everyone but it is ridiculously complicated. Drivers don’t care as long as their premiums are lower, but there aren’t even any reductions. No one appreciates what
they’ve lost until they are injured.”
The changes, Goldfinger notes, are significant. “Before Sept. 1, 2010, everyone, no matter what, had $100,00 for any medical or rehabilitation expenses that were reasonably necessary
that were not covered by OHIP. That included physiotherapy, chiropractic, psychology, neuropsychology… It covers a lot. Now you’re paying the same and getting half. It does not make sense. People don’t have the money to fund their own rehabilitation. They’re going to be hurt.”
Hatfield is particularly frustrated since it was the insurance industry that asked for the current benefits regime, which stops people from suing for medical costs and instead makes them
go through the insurer. “Now they’re trying to dismantle it,” he says. “As a consumer, it’s frustrating. As a lawyer, I realize what they’re trying to do is reduce people’s rights right off the bat when they’re buying insurance.”
Another early stage where the changes will have a big impact is during assessment and diagnosis. “Prior to the changes, an individual could apply for funding to be assessed and that didn’t reduce the total,” says Brian Mathers, an insurance and casualty specialist who works within Greg Monforton and Partners. “The only test was if it was reasonably necessary. Now there is a limit of $2,000 per assessment, and it will come out of the lower amount of $50,000. So you’re paying for your own assessment.”
Monforton adds: “It’s downloading on to the innocent and injured the cost of diagnosing what’s happened to them.”
But anyone searching for benefits to offset the losses won’t necessarily find them. “The insurance industry will say that you can opt in to get pre-September 2010 benefits but you have to pay more for them,” says Goldfinger.
In fact, all of the practitioners interviewed on the personal injury side of the issue say none of their clients bought the optional benefits. “Experience has shown that most people are not properly educated by their brokers about optional benefits,” says Monforton. “Only the wealthy and the well-informed will buy them, and few Canadians are both. People get a big package in the mail, but nobody reads it. They just look for the pink slip.”
Consumers may expect such big losses of coverage would lead to a reduction in premiums, but that’s not the case, according to lawyers. “You won’t see any decreases in the foreseeable future,” says Mathers. “Many insurers have already received one if not two increases this year. The government has only promised that they will be holding premium increases in check.”
The only good news for personal injury lawyers is that their clients will need them more than ever to work through the legal ambiguities and inconsistencies to get fair treatment and
In the meantime, while lawyers representing insurers declined to comment on the merits of the reforms, Tom Ozere of Borden Ladner Gervais LLP in Ottawa says they’ll also mean significant changes for practitioners on the tort side. “The amounts of offsets are being dramatically reduced. It will increase exposure in areas where there was previously no pretrial
exposure such as medical and rehabilitation expenses: housekeeping, and handyman expenses because the accident benefit insurers covered them before.”
Monforton, however, sees that scenario as a double-edged sword. “If you download more costs on to the tort system, this will give the insurance industry impetus to seek more reductions in the future.”
by Judy Van Rhijn
originally published Oct. 18, 2010 – Law Times