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On March 6th, Jim Mays gave a speech as part of the Rehabilitation First Breakfast Seminar Series. This article is a text of that speech. Jim joined Siskinds in 1987 and has been a Partner since 1992. He is the Personal Injury Practice Group leader.

“I have to say that I feel a little bit like Rick Mercer today. When I have given talks in the past they have been about the law or at least my interpretation of some aspect of the law. Today I have been asked to give my views on the current operation of the SABS system, the politics of the system and what, if anything should be done to change the system. I have to admit I am a little out of my comfort zone. But, never being one to walk away from a challenge, here goes my first “rant”.

I shall begin with “Why do we even bother with the SABS system; especially now that it provides little meaningful coverage?” The amount of $50,000.00 for supplementary medical and rehabilitation benefits is not much better than the $25,000.00 from 25 years ago. Additionally, there is this awful MIG system of which I will speak more on later. The IRB portion of the coverage makes some sense, particularly if insurers let people understand that they can expand their personal coverage to meet their family income needs. The bottom line is that we are not getting very much coverage for a rather large expense. Many families, mine included, have looked at supplementary insurance to provide meaningful coverage should we suffer injury. With that criticism leveled, we must have and must keep the SABS system. Without a SABS system, both innocent and non-innocent injury victims could have their lives torn asunder after an auto related injury. Back in the day, if you suffered an auto related disabling injury, your income stopped and you only had the OHIP system to help you get better. If you were the only source of income in your home and you were injured things got bad fast. If you were lucky, extended family kept you going. If you were not lucky, you had some awful choices to make. Lawsuits do not protect the innocent victims in the short term as lawsuits take time – too much time to protect the disabled from poverty and all the social consequences that poverty brings.

Having a specialized auto injury rehabilitation and benefit system is in our society’s best interest because in the vast majority of cases people injured in motor vehicle collisions get better, get back to work and get back to caring for their family and paying taxes – much more quickly than if they had to rely upon the OHIP system for rehab benefits or the ODSP system for income replacement benefits.

Should the government take the Accident Benefit system over – a WSIB system for auto collision victims? Rarely has a government owned not-for-profit business delivered a better product in the long-term than private business. I suggest that we are long past the days when the majority believe that is the way to go.

So, to answer my first question; we need the SAB system because it provides a social network which helps to prevent those disabled from motor vehicle collisions from suffering the impacts of poverty AND provides a specialized health care delivery system which brings people back to health much sooner than the generalized OHIP system. We must remember that it is in our collective self-interest to work together to ensure this system works.

My next question: is our system too expensive? Do we need to statutorily reduce the insurer’s exposure to payments and/or do we allow an insurer’s to raise premiums to ensure all costs are met? Frankly, I do not know the answer. The insurance companies are certainly entitled to a profit. I do not believe that profit is a bad word. These companies made an investment of money, effort, knowledge and goodwill and are entitled to a return on that investment. But inefficiency or bad business practices ought not to be rewarded. The insurance companies should not automatically be able to set rates to ensure a profit regardless of how they run their business. A government’s role ought to be to persuade, in a constructive manner, the insurance industry to operate efficiently. Not just as a regulator of the amount of premium. What I would suggest is that the insurers ought to publish or make available audited financial statements zeroing in on the amount spent that actually goes into the hands of policyholders vs the amount spent to get the money to the policyholders. We might also see value in measuring the cost of actual treatment versus the money spent overseeing or fighting making those payments. What I am suggesting is that the public see money that goes out in benefits separated from money that gets spent on running the system.

Maryland Circuit Court Judge Thomas Smith said that “of all the oxymorons in the world, an independent medical examination occupies first place by thousands of leagues. There is nothing independent about the process; it is hardly undertaken for any medical purpose and it all too often resembles an inquisition rather than an examination”.

I would suggest that everyone in this room has had dozens of experiences that allow them to relate to and agree with Judge Smith’s comment.

Contesting the so called findings of these so called independent experts is always expensive both in the funding of obtaining counterbalancing reports and the costs and time in working your way through the FSCO mediation and arbitration system. It would not happen without a lawyer acting for the injured person. We flirted with DAC years ago where the government appointed a “qualified” expert to independently determine whether the treatment was necessary. It was a great concept and if humankind fulfilled our potential we might not have to wait for our eternal reward. But what we found out was that in one way or another, the DAC system became corrupt. The majority of key medical assessors seemed to have a point of view that most often denied benefits. MPP Peter Cormos published a study that DAC assessors refused approximately 80% of treatments recommended by doctors. This imbalance was a statistically unreportable result. How and why that happened is anyone’s guess – and we all have them – but it did happen and a really good idea could not find sufficient traction to gain the trust of all the players.

The bottom line is that we should not go back to the DAC system.

So our current adversarial system probably produces the most reliable, albeit, the most expensive results but if we are looking at trimming costs, this is an area that should be targeted. How often have we seen a treatment request be met with a request for multiple IME’s and each of these IME practitioners will conduct an impressive inquisition of the patient; pages and pages of questions and answers. What a waste of money particularly if there is an OHIP funded treatment team making the request for the treatment in the first place. If the treating, publicly funded healthcare team makes a recommendation, what a waste to spend public insurance monies to challenge it.

Then we have all the stories about fraud.

A current headline is that there was $1.6 billion in auto related insurance fraud costing the average driver an extra $236 in 2010. My first thought was that if the claim costs dropped substantially in 2011 and 2012, who got that $236?  It was not the insured drivers! My next thought was, “Don’t people who commit fraud try to keep it a secret?” So how do they know that there is 1.6 billion in fraud, and why, if they know, do the insurers not stop paying those claims and get the police involved?

That got me thinking – dangerous I know! – Where did that 1.6 billion number come from?

The answer is that it comes from the Ontario Auto Insurance Anti-Fraud Task Force report filed in November of 2012.  The Task Force noted in their report:

“We were asked to provide our best estimate of the extent and geographic distribution of fraud in Ontario. This is not an easy task, since those engaged in fraud have every incentive to conceal their actions.”

To gain an estimate of the dollar impact of fraud, the Task Force decided to work with the Insurance Bureau of Canada (IBC). The IBC is an insurance industry created and funded entity. The IBC independently retained KPMG to quantify the amount of fraud in 2010 in Ontario.

After some time KPMG concluded that “there is insufficient information to provide a precise and statistically based estimate of auto insurance fraud in Ontario”. Yet, the report “estimates” that the cost of fraud in Ontario ranges from 9% to 18% of annual claims costs. In 2010, that range is estimated to be between $768 million and $1.56 billion.

So that is where the number $1.6 billion comes from, a rounded up upper limit of a guess from an accounting exercise sponsored by the insurance industry.

But where does the 9 – 18% figure come from? How did the KPMG study conclude that those figures are the appropriate figures to use in estimating fraud? That range is in fact a “best guess” using assumptions from U.S. studies and some small Canadian studies. On no basis could this evidence ever be accepted as “opinion evidence” in an Ontario court room. It is just a guess wound up in a lot of fancy language for which we, as tax payers, have paid a hefty sum. Yet that is the figure that the insurance industry is using in its media campaigns.

So while I have no faith in the advertised SIZE of the problem, I do accept that there is a problem. It is well documented that, mainly, but not only, in Toronto I might add, there are healthcare providers who are abusing the system. Thus, in my view, where there is smoke there is almost always fire. Fraud exits. It is a problem. It needs to be dealt with.

Which brings me back to my original question of “trimming costs”? Why should the insurance industry be allowed to raise premium to account for fraud when they are not making any effort to catch people who create fraud? If the insurance industry can statistically assemble the number of auto accidents in Ontario and the number of injuries arising from those accidents and the probable costs of claims arising from those injuries, why can they not track the source of fraudulent claims? This is a reference back to the insurance industry being responsible to run itself efficiently. That is their responsibility. They should not be entitled to simply “raise premium” any time they wish a profit. They must be responsible to run a reasonable and efficient business – just like every other business owner.

Somebody, somewhere, is filing paperwork to obtain funds for treatment that either did not occur or is overpriced. If the risk is $1.6 billion in annual fraud costs, why can the industry not spend $10 million or even $20 million for that matter to develop software to identify potential sources of fraud? If the CIA and CSIS can search through cellphone traffic to look for terrorist threats and if retailers and researchers can search through Facebook and Google traffic to identify societal and consumer trends, I am certain that the insurance industry could co-operate and pool its data to analyze costs per claimant, treatment provider and then identify suspicious trends. These claims would have to be followed up with an actual investigation to obtain a conviction, but would that not be a more effective and more efficient way to deal with fraud rather than simply complain and seek premium increases? Up to now, the industry did not have to look for internal efficiencies because they would just raise premiums. It is an easy and VERY cheap fix. If our government opposes their effort to raise premiums, the industry, collectively, takes a tantrum. This iteration of the corporate tantrum is using a media campaign to “expose” the extent of fraud the “government” designed system forces on the industry costs. The inference is that the only reasonable solution is to let premium costs go up.

I do want to make it clear that I do not make these statements to justify fraud.  Fraud is wrong and the full force of the justice system ought to be unleashed on the perpetrators of these crimes. My purpose in making these comments is to support the view that the current system ought not to be further reduced or allow premium costs to increase simply to combat fraud. The benefits the system provides are at a bare minimum now. The size of the alleged fraud is highly questionable and, I would suggest, unsupportable. Fraud should be fought by encouraging insurance companies to become efficient and utilize resources that already exist to stop fraud.

My next comment is on the MIG. Why do we discriminate against people who suffer connective tissue injuries by guiltily forcing them into something called the Minimum Injury Guideline? Are they somehow less deserving of medical treatment and care? It is no longer social acceptable to somehow suggest there is moral failing with lepers or people with HIV or a host of other illnesses. It ought not to be socially acceptable to label people who suffer a soft tissue injury as people who have a “minimum” injury. We know that these are real injuries. Study after study around the world has confirmed this fact. We know the vast majority of connective tissue injuries heal within 12 months with appropriate treatment. We also know that there are a percentage of connective tissue injuries that do not heal and leave people with permanent functional losses.

Maybe a good reason for minimizes the exposure to health care would be that we cannot fully afford to cover this population. I would argue that these people quite often become a burden on the OHIP and the CCAC system as well as the ODSP and CPP system, so this position creates false dichotomy – but – if that is the political decision, why don’t we just say we don’t cover connective tissue injuries or we limit the coverage because it is too expensive otherwise? Why do we have to call it something pejorative like a “minimum injury” – if you have ever had a connective tissue injury or treated people with connective tissue injuries, you know most of them are not a “minimum injury”. We should be honest and just state it costs too much – and not continue to promote unfair stereotypes.

While I am ranting – the term “minimum injury” is trumpeted by defence lawyers in jury trials for people with connective tissue injuries making a fair trial almost impossible. I can hear the defence counsel now stating “our government classifies these injuries as a “minimum injury” and you should too.”

The MIG in my respectful view ought to be rescinded. The concept is prejudicial. Either give the people who suffer connective tissue injuries the same benefits as everyone else, or clearly inform the public that they have minimum or no coverage should they suffer such an injury. Adequately warned, the public could choose to take steps to get other coverage.

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