Update on Statutory Accident Benefit Legislation

Introduction

There have been a number of key developments relating to new SABS (Ontario Regulation 34/10, effective September 1, 2010), since the new SABS were introduced in late February, 2010.

In particular, the following items are of significance:

• FSCO Bulletin A-04/10—Transition to the New Statutory Accident Benefits Schedule Effective September 1, 2010 ;
• FSCO Bulletin A-10/10—Minor Injury Guideline and Revised Minor Injury Treatment Discharge Report (OCF-24);
• The Minor Injury Guideline (MIG);
• FSCO Bulletin A-13/10—Revised Accident Benefit Claims Forms and New Attendant Care Hourly Rate Guideline;
• Ontario Regulation 289/10, amending the new SABS (Ontario Regulation 34/10);
• FSCO Bulletin A-17/10—Changes to the Insurance Act and Statutory Accident Benefits Schedule-Effective September 1, 2010.

This paper will briefly address the following key items relating to the implementation of the new SABS:

1. Transitional Issues;
2. A Brief Overview of The Minor Injury Guideline;
3. The New Accident Benefit Forms;
4. Amendments to the new SABS set out in Ontario Regulation 289/10;
5. Key Interpretation Issues including:
   1. Whether pre-approval is required for Form 1 Assessments;
   2. Whether costs like interpreter costs and transportation costs are covered by the $2,000 assessment/examination cap; and,
   3. Whether Treatment and Assessment Plans can be denied simply on the basis of potentially not being “reasonable and necessary”;
6. Amendments to the Insurance Act:
   1. Eliminating the statutory deductible in tort in fatality cases; and,
   2. Adjusting the past income rule to 70% gross income in tort.

A) Transitional Issues

FSCO Bulletin A-04/10 (attached at Tab 1) was issued on April 26, 2010. The bulletin attempts to clarify how certain changes to the Statutory Accident Benefit Schedule are to be interpreted.

In short, for claims that predate September 1, 2010, all substantive entitlements remain governed by the old policies—in terms of the benefits available, but the process of accessing those benefits will be governed by the new SABS.

Importantly, the bulletin confirms that the new definition of ‘incurred’ does not apply to accidents that predate September 1, 2010.

While the $2,000 assessment/examination cap does apply to all accidents, including ones that predate September 1, 2010, pre September 1, 2010 claimants will not be paying the cost of assessments/examinations out of their limits.

With respect to interest owed on past accounts, for unpaid invoices that predate September 1, 2010, interest will continue to accumulate at 2% per month compounded after September 1, 2010.

For all accidents on or after September 1, 2010, the entire claims process and the claimant’s rights will all be governed by the new SABS, with the exception that, if the claimant has access to a policy that has not yet been renewed, the claimant is deemed to have purchased optional benefits akin to the pre September 1, 2010 maximums (specifically, the non-catastrophic medical and rehabilitation benefit maximum of $100,000, the non-catastrophic attendant care benefit maximum of $72,000, housekeeping and home maintenance benefits and caregiver benefits).

B) A Brief Overview of The Minor Injury Guideline

On July 14, 2010, the Minor Injury Guideline (MIG) was published (attached at Tab 3).

The FSCO bulletin A-10/10 (attached at Tab 2) announcing its introduction clarifies that the PAF Guidelines continues to apply to accidents that pre date September 1, 2010.  However, note that for all accidents after September 1, 2010, the Minor Injury Guideline does apply, even if an old policy governs.

The bulletin specifies that the MIG is an interim measure that will be replaced with a more comprehensive Guideline at some point in the future.

Under the MIG there is up to $2,200 in pre-approved goods and services that are divided into three blocks of time post accident, namely:

• Block 1 – $775 (weeks 1 to 4);
• Block 2 – $500 (weeks 5 to 8); and,
• Block 3 – $225 (weeks 9 to 12).

In addition, the MIG provides $400 for supplementary goods and services, a $50 transfer fee for the new practitioner.

The MIG also restricts persons from obtaining an in-home assessment or attendant care benefits if their diagnosis falls within the definition of a “minor injury”.

The MIG provides a very broad framework for how someone with a minor injury is entitled to spend their initial $2200, all of which is pre-approved.  Once the claimant completes their treatment in the MIG, the remainder of their $3,500 in medical and rehabilitation benefits must be accessed through an OCF-18.

Once the $3,500 amount is exhausted, the only way a claimant with a “minor injury” may access additional medical and rehabilitation funding is if the claimant’s pre-existing medical condition is preventing them from achieving maximum recovery under the $3500 umbrella.  In this case, the health practitioner must provide compelling information that this is indeed the case.

More importantly, however, a claimant may escape the restricted benefits of the MIG altogether if their condition turns out to be something other than a “minor injury”—such as a fracture, brain injury, psychological condition, etc.

Because of the extreme monetary restrictions associated with minor injury claims, we can expect a large number of disputes relating to whether a claimant’s injuries are properly considered a “minor injury” or whether they are properly considered “non-catastrophic”.

C) The New Accident Benefit Forms

FSCO Bulletin A-13, 2010 issued June 16, 2010 (attached at Tab 4), introduces the new OCF forms to be used for all claims, including those that predate September 1, 2010.

Of significance is the new Treatment and Assessment Plan (the new OCF 18) which serves to eliminate the old Approval of an Assessment or Examination form (the old OCF 22).  Accordingly, the old OCF 22 no longer exists and should not be used.

It should be noted that the new Treatment and Assessment Plan requires a signature by the claimant (unless waived by the insurer), unlike the optional signatures on the old OCF 22s.

D) Amendments to the new SABS set out in Ontario Regulation 289/10

On July 14, 2010, Ontario Regulation 289/10 was filed, amending the new Ontario Statutory Accident Benefit (Ontario Regulation 34/10), effective September 1, 2010.

The key amendments include:

1. Reverting back to allowing catastrophic impairment applications prior to the 2 year anniversary of the accident where the condition is unlikely to cease to be a catastrophic impairment—this was a positive development that will help address probable catastrophic claims that exhaust their non-catastrophic benefits before the 2 year mark.
2. Making it clear that a physician or neuropsychologist completing a catastrophic impairment assessment can be assisted by other regulated health professionals—this was a clarifying sensible amendment expressly permitting catastrophic assessors to rely on other regulated health professionals.
3. Clarifying that the cost of “preparing reports” is caught by the $2,000 assessment or examination cap—this was an amendment needed to address an omission in the original new SABS relating to the cost of preparing reports.
4. Expanding the $2,000 total assessment or examination cap to expressly include “expenses”—this is a very controversial expansion of the $2,000 cap and is discussed in detail below.
5. Clarifying that a “minor injury” can include more than one soft tissue related complaint (i.e. more than one minor injury)—this clarification was needed to preclude claimants with multiple soft tissue type claims from escaping from the “minor injury” definition and the $3500 hard cap.
6. Slightly narrowing the controversial definition of “incurred expenses” to persons either sustaining an economic loss or to persons who would have ordinarily, “but for the accident”, been engaged in providing the goods or services as part of their “employment, occupation or profession”—this clarification is an attempt to reduce confusion associated with the new definition of “incurred” but arguably fails to do so.
7. Expanding the definition of “qualified case manager” to include the coordination of attendant care benefits—this was needed to recognize that a case manager’s role includes coordinating attendant care benefits as well as medical and rehabilitation benefits.
8. Rewording the definition of who may prepare accounting reports—this development is of no significance.

The new SABS as amended by Ontario Regulation 289/10 will pose various barriers to accident victims both in the reduced amount of benefits available and in relation to the difficulty claimants may experience in accessing benefits in light of the new definition of ‘incurred’.

E) Key Interpretation Issues

There are three specific issues of interpretation that are of great concern relating to the new SABS that need to be addressed.

The three issues are as follows:

1. FSCO’s view that pre-approval is required for a Form 1 assessment;
2. The concern that translation and transportation costs are caught by the $2,000 assessment cap; and,
3. How to deal with Treatment and Assessment Plans that are denied solely on the basis that they are not “reasonable and necessary.

It is noted that another key interpretation issue deals with the new definition of the term “incurred expense”. That important issue is the topic of a separate paper and presentation.

1) Form 1 Assessments Requiring Pre Approval?

Prior to September 1, 2010, any Form 1 attendant care assessment could be done without the need to secure pre-approval from the accident benefit insurer.  Nevertheless, many rehabilitation companies developed a practice of clearing the Form 1 assessment with the insurer in order to avoid any potential payment related issues or delays.

Originally, under the new SABS, representatives of FSCO provided verbal assurances that the process of not requiring pre-approval for a Form 1 assessment would remain.  But, since those initial assurances, FSCO representatives have reconsidered their position and are now advising the public that pre-approval is required for a Form 1 assessment (see, for example, the FSCO Contact Center Staff email dated September 8, 2010 addressed to Joanne Gram at Rehab First at Tab 6).

The argument that pre-approval is not required for a Form 1 assessment arises from the clear wording of section 25(1) of the new SABS requiring an insurer to pay reasonable fees associated with preparing an assessment of attendant care needs.

However, the contrary argument is that section 38(2) of the new SABS says an insurer is not liable to pay an expense in respect of a medical or rehabilitation benefit or an assessment or examination that was incurred before the insured person submits a treatment and assessment plan, unless certain conditions are met (like an emergency within 5 business days of the accident).

Insurers (and FSCO) are taking the position that the word “or” in section 38(2) should be read to include attendant care assessments.

Because section 25(1) allows only “reasonable fees” to be charged in relation to the assessment of attendant care needs, and having regard to the fact that insurers notoriously take issue with what should be considered ‘reasonable fees’, it seems appropriate to encourage attendant care assessors to seek pre-approval before completing a Form 1.  That said, there remains a very strong argument that the clear intention of section 25(1) is to allow Form 1 assessments to be conducted without prior approval, as otherwise claimant’s would face an obstacle before being able to access attendant care benefits.

Whenever a form 1 assessment is required, the assessor may wish to contact the accident benefit adjuster for verbal approval and/or may wish to seek assurance from the claimant’s personal injury lawyer about payment for the cost of the assessment in case of a dispute with the accident benefit insurer.

2) Interpreter and Transportation Costs

The amendment to the $2,000 cap provision to expressly include “expenses” in relation to an assessment or examination may lead to difficulties assessing claimants in certain situations—such as where geographical barriers or language barriers exist.

The inclusion of the word “expenses” appears to include all transportation costs incurred by the assessor, making it even more important to, wherever possible, engage local treatment providers.

FSCO has clarified their view that translation costs and transportation costs are covered by the $2,000 cap, although the cost of transporting the claimant is notcovered by the $2,000 cap as this cost is paid by the insurer directly to the claimant (see letter from Philip Howell at FSCO to Don Ferguson at the IBC dated September 1, 2010, attached at Tab 7).

Ironically, it is noted that the insurers may be the ones most prejudiced by an interpretation that restricts the use of an interpreter since claimants can often engage family members to translate for the purpose of an assessment that they support, but a paid translator may be required for an Insurer Examination, thus eating into the scope of the IE that can be conducted within the $2,000 cap.

It is hoped that in the coming months, clarification will be made to allow for translation and transportation costs at the insurer’s expense over and above the medical and rehabilitation benefits and/or over and above the $2,000 assessment/examination cap—without such clarification, claimants in remote areas and/or claimants requiring translation services may be unfairly prejudiced.

3) Denials on the basis of not being “reasonable and necessary”

Under the new SABS, where an insurer does not approve a Treatment and Assessment pans they must identify the “medical and any other reason” for the denial (see subsection 38(8) of the new SABS).

However, many adjusters continue to reject Treatment and Assessment plans on the basis that the plan may not be “reasonable and necessary”.  In so doing, the adjusters have often been omitting the required reference to the “medical and any other reason” for their position.

In response to a denial for the stated reasons of not being “reasonable and necessary” many treatment providers are sending a letter to adjusters stating their position that the denial was not in accordance with the governing new SABS and that, accordingly, the Treatment and Assessment plan has been deemed approved (see, for example, the precedent letter kindly provided by Karen Rucas of Karen Rucas & Associates, attached at Tab 8)

For now, voicing this technical complaint is appropriate and doing so may help persuade adjusters to simply approve the Treatment and Assessment plan that would otherwise be in dispute.  But there is no doubt that the insurers will soon develop and implement new protocol to address this technical complaint and that denials will soon start identifying the alleged “medical and any other reason” for the insurer’s view that the proposed Treatment and Assessment plan is not “reasonable and necessary”.

F) Amendments to the Insurance Act

As part of the overall changes to auto legislation set out in the new SABS effective September 1, 2010, two amendments made to the Insurance Act in relation to tort claims (claims against at-fault drivers).

The two changes are as follows:

1. Eliminating the statutory deductible that otherwise applied to tort claims by loved ones following the death of a family member; and,
2. Synchronizing past income loss claims in tort with the new calculation for income replacement benefits pursuant to the new SABS (specifically to be calculated at 70% of gross income rather than at 80% of net income).

1) Eliminating the Fatality Deductible

The Ontario government has finally corrected a miscarriage of justice caused by the application of a harsh and inappropriate $15,000 statutory deductible that commonly applied to claims by family members following the death of a loved one in a motor vehicle accident in Ontario.

As of September 1st the controversial deductible has been eliminated in all cases of death caused directly or indirectly by a motor vehicle accident in Ontario.

The logic behind a statutory deductible is generally considered to be to deter modest claims by those with modest injuries, but since cases of death are by necessity serious cases, that logic never applied.  In fatality cases, family members are rightfully angry and want justice both in the criminal and civil context for the premature death of their loved ones.

Even though the pre September 1st legislation provided a ‘vanishing’ deductible where no deductible applied to claims under the Family Law Act of Ontario for compensation for loss of care, guidance and companionship in excess of $50,000, many valid claims by loved ones were often substantially or entirely wiped out by the $15,000 deductible that otherwise applied.

While the elimination of the fatality deductable is most welcome, the interpretation and implementation of the new subsection of the Insurance Act eliminating the deductible may lead to some confusion and uncertainty.

As part of Bill 16, Creating the Foundation for Jobs and Growth Act, 2010, the Ontario government amended section 267.5 of the Insurance Act by adding subsection 267.5(8.1.1).  New subsection 267.5(8.1.1) eliminates the statutory deductible, as of September 1st for claims “…in respect of a person who dies as adirect or indirect result of an incident that occurs after August 31, 2010″.

Removing the deductible in situations where the death is an ‘indirect’ result of a motor vehicle accident may revive long standing disputes regarding the relationship between a motor vehicle accident and an injury.  Those disputes addressed the fundamental issue of whether someone was in an “accident”, as defined by the Statutory Accident Benefit Schedule, so as to be entitled to no-fault benefits.  Older versions of the Statutory Accident Benefits Schedule defined “accident” to include injuries “directly or indirectly” resulting from a motor vehicle accident, while the newer and current definition of “accident” narrows the definition to injuries “directly” related to a motor vehicle accident.

As a result of the inclusion of the word “indirect” in new subsection 267.5(8.1.1), anytime a claimant dies with an outstanding tort claim his family members will want to argue that the death was a “direct or indirect” cause of the accident and that no deductible ought to apply to their claims.

Also of interest is the fact that new subsection 267.5(8.1.1.) does not include a deadline for what might be considered a “direct or indirect” accident related death.  By comparison, under the Statutory Accident Benefit Schedule, a death benefit is payable if an insured person dies within either 6 months (180 days) of the incident, or 3 years (156 weeks) if the person was continuously disabled as a result of the accident.

Recognizing that the deducible already does not apply in cases where the amount of the Family Law Act claim exceeds $50,000, there nevertheless are some interesting scenarios that can arise from this new provision.

For example, imagine a grandparent injured in an accident.  Typically, claims under the Family Law Act of Ontario by grandchildren would be largely or entirely wiped out by the $15,000 deductible.  Now, however, if the injured grandparent happens to die indirectly from their injuries, these claims will be viable as no deductible will apply.  Alternatively, plaintiff’s counsel may now, in cases where eventual death from injuries is expected, rightfully suggest at mediation that no deductible should apply to the Family Law Act claims.

There is also the question of how limitation periods would be applied where a claim that is not otherwise financially viable becomes viable following the death of a loved one.

2) Past Income Loss Claims now calculated on 70% gross income basis

In addition to eliminating the fatality deductible, Bill 16 amends sections of the Insurance Act dealing with past income loss claims in tort.  The amendments serve to synchronize past income loss claims in tort with the new 70 percent gross income calculations used for Income Replacement Benefits as of September 1st under the new Statutory Accident Benefits Schedule.

The elimination of the statutory deductible in fatality motor vehicle claims is an overdue and appropriate change that hopefully will be implemented in a way that recognizes the severe emotional impact caused by the premature death of a loved one.

Conclusion

Unless optional benefits become the norm rather than the exception motor vehicle accident victims in Ontario will have reduced access to accident benefits after September 1, 2010.

Further changes are expected to the new SABS including Guidelines for conducting Catastrophic Impairment assessments.

Please monitor our website for updated information.