The issue that is motivating elimination of the tort system today is the perception held by some that it is unnecessary and expensive. The point is valid only to the extent that the tort system is utilized to deal with obvious, short term income and treatment related losses that have usually already been perfected at the time of settlement. As it stands now, in the absence of adequate accident benefits coverage and a concurrent, effective delivery system, the tort approach is used to fill the vacuum on these past losses. Very expensive sledge hammers are being routinely used to swat mosquitos to the growing annoyance of the premium payer.
In 1973, when the concept of government insurance was initially conceived and communicated to the public, ‘no-fault insurance’ meant the immediate delivery of wage and treatment related support to people injured in car accidents. The 2016 version of the term has come to mean the taking away of the rights of British Columbians to fair compensation for all aspects of injury related loss. We need to return to basic values. It’s not too late to honour the promise that was so widely endorsed by the public at the time.
The Dual Claimant Problem
Almost every single time a person is injured because of a motorist’s negligence he/she has an accident benefits claim for medical expenses, wage replacement, and if required, rehabilitation costs. At the same time, he/she has an additional claim against the negligent motorist’s third party liability coverage for all other losses. Because ICBC is the monopoly provider of both accident benefits coverage and basic third party liability insurance, the injured person and ICBC must engage in the settlement of both claims.
Honouring the accident benefits contract that it has with the injured person often diminishes the defenses the Corporation is obligated to maintain on behalf of the tortfeasor. Notwithstanding the obvious and inevitable conflict created by the dual claimant situation, ICBC has always used the same adjuster, in the same department, working out of the same file to handle both claims.
This conflicted and confusing claims situation is created over 40,000 times a year. This leads to operational inefficiencies, process based inflation of tort settlement outcomes, poor customer service, and a negative relationship with the public generally and claimants individually. From a societal perspective, the result is a diminishment of ICBC’s capacity to affordably deliver timely and appropriate compensation to all British Columbians involved in motor vehicle accidents.
The Solution
There is a solution to this problem that can realistically yield annual savings in the millions of dollars, and produce a dramatic improvement in the cost-effective delivery of both tort and contractually based compensation. Structural and regulatory changes could enable ICBC to effectively focus the considerable resources of the Corporation on the injury, which is the root of both tort and accident benefits claims, particularly during the acute stage when remediation is most effective and most needed.
Structural Changes:
At one time ICBC maintained a narrow commitment to a separation of the administration of accident benefits and tort coverages in the form of a Rehabilitation Department. Even so, that department’s activity was limited to cases of severe injury; and even that minimal level of commitment has been reduced in the post-2008 era. What is in fact needed now is a reversal of that trend.
An entirely separate and more vigorous ‘Accident Benefits Claims Department’ reporting directly to the Vice President of Claims must replace the existing ‘Recovery Management Unit’. This department should be staffed by employees equipped with specialized skills and the singular mandate of helping all people injured in motor vehicle accidents get better and, in the case of the disabled, get back to work. The ideal Accident Benefits Claims Department employee would have a good knowledge and understanding of accident benefits coverage and the ability to understand and operate within the health care field.
Beyond Function to Perception
Within the world of formal law the handling of information is highly valued for good reason. The Rules of Evidence loom large in civil litigation. In the world of insurance, the obligation of an insurer to act with utmost good faith where potential conflicts between its interests and those of its insureds exist, is a hallmark of the profession. Within the world of ICBC, information and decision making converge in a miasma of conflicting contractual obligations. The operational separation proposed here insulates the Corporation and protects the public from the specter of bad faith.
Regulatory Changes:
Now
Currently, Section 80 of the Regulations, titled “Disability benefits for employed persons,” acknowledges the need to stabilize the injured person financially. Section 88, “Medical or rehabilitation benefits,” then provides for a limited array of treatments specific to the traumatic nature of motor vehicle accident injuries. However, accident benefits coverage, as it is currently written, is secondary to all other forms of insurance including MSP. Even when it is eventually made available, it is woefully inadequate.
The Critical Time Frame
The acute stage of any injury is already defined by Section 80 as “… the duration of the total disability or 104 weeks, whichever is shorter…”. Indeed, this time frame is echoed in most private sector wage indemnity coverages. It also resonates with my personal experience since 1971 that tells me a responsible prognosis is available on most injuries within two years of the trauma.
The Need for Early Engagement
For the injured person, this is an extremely traumatic time in their lives. Finding their way to ICBC through a maze of complicated application procedures and coverage wordings that come with the need to first apply to Employment Insurance, and/or Work Safe BC and/or private sector carriers such as Great West Life or Blue Cross can be overwhelming.
Some give up immediately and turn to legal counsel for support. Even for those who overcome this hurdle, the experience lays the ground work for an embittered perception of ICBC. People don’t consider their car accident injury as a workplace event or an illness. They don’t understand why ICBC isn’t immediately stepping up to the plate. The opportunity to lay a positive foundation for the resolution of all their injury related claims is replaced with a sense of disappointment, and frequently, anger. When ICBC and the injured person eventually do come face to face on the claim, what ICBC can offer pursuant to accident benefits coverage is too little, too late.
Needed Benefits Expansion
Wage indemnity is maxed out at $300 per week, which is $15,600 a year, well below the poverty line. Real financial barriers to treatment, such as user fees ranging from $40 to $60 per physiotherapy treatment, are not payable by ICBC under the contract and often not affordable by the injured person in their circumstances. Neither are MRI’s and other diagnostic procedures that doctors often rely on to expedite treatment. Wait times under MSP coverage for diagnostic and surgical procedures can easily be six months or longer.
For the catastrophically injured, even the current level of coverage, $150,000 doesn’t meet the need. It was set in 1990. Homemaker benefits need to be extended to family members to reflect the common practice of relatives substituting for an injured homemaker and set at a level that is 50% of professional care services.
Particularly for soft tissue injuries it would be beneficial for ICBC to have the capacity to pay under Part 7 for counselling services given that there is a psychological component to almost any physical injury.
Funeral expense of $2,500 is obviously inadequate for even a basic disposal of a body.
The Business Case for Change
The Injury
People get stressed when they can’t pay the rent and can’t afford treatment. Stress easily transforms into compensable psychological injury, best encapsulated in, but not limited to, the DSM 5 diagnosis of “Adjustment Disorder”. Such a diagnosis is common in motor vehicle accident injury cases. Even without an official diagnosis, any doctor will tell you that stress increases the perception of physical pain and consequent loss of function. Providing coverage to meet a general practitioner’s recommendation for counselling would allow for addressing all aspects of the injury itself. The recommendations for expanded financial support would work with counselling, or often obviate the need for counselling, all of which would mitigate the injury effects and expedite recovery.
The Person
At this critical time, not only is the opportunity to establish a positive relationship lost but it is replaced with a perception that ICBC has shirked its duties at a time when the injured person needs ICBC most. The help injured people need is either significantly reduced or put entirely out of reach by the confusion and inefficiencies currently present in the administration of what should be the primary compensatory coverage for motor vehicle accident related injuries.
The Corporation
In the tort world, the difference between a $50,000 moderate soft tissue injury claim and a $350,000 chronic pain case is intensity, duration and an absence of hope. The difference between a $15,000 Bill of Costs and a $70,000 Bill of Costs is often an embittered plaintiff. Stabilizing the injured person financially so that they can take advantage of accessible and cohesive treatment and rehabilitation options during ‘the critical time frame’ minimizes the negative effects of the injuries that cost ICBC dearly on the tort side.
The Changes
This means making accident benefits coverage primary. It means raising the weekly indemnity limit to a level that would effectively replace the net income of most injured persons, that is $1,000 per week or 100% of net income, whichever is the lower. It means broadening the base of covered treatments to include the psychological element and removing the restriction to MSP rates. It means providing coverage for diagnostic and surgical procedures necessary to expedite treatment. For the catastrophically injured it means bringing the administration of benefits in-house to reverse the erosion of coverage precipitated by payments to outside contractors for the supervision of benefits, a task they are not actually even trained for.
The Advantages
From the injured person’s perspective
- timely financial stabilization through adequate weekly indemnity rates
- timely access to fully underwritten and expedited, professionally guided treatment programs
- clarity in the relationship between the injured person, health care professionals and the different facets of ICBC
- restoring the coverage for the catastrophically injured, previously taken away by ICBC’s post-2008 decision to outsource aspects of benefits administration and restoring real limits of coverage currently eroded by inflationary effects over the significant time frame that has elapsed since the limits were last adjusted
From the Corporation’s perspective, the advantages can be summarized as follows
- opportunities to collect premium income congruent with the actual exposures
- more effective administration of coverage
- appropriate information management and claims related decision making where both the tort and accident benefits claims interrelate
- a more positive, informed and simplified environment for the settlement of tort exposures
- improved public image
Concerns
If weekly indemnity is set at the level of usual net income, then more people will be off work longer
Payment of weekly indemnity is based on medical opinion. That medical opinion would be provided in the context of an appropriate treatment plan, designed by the treating physician and underwritten and actively managed by a skilled employee of the Insurance Corporation. Legitimate claims would be paid, fraudulent claims would not.
Being employed, in addition to providing money to ‘support individuals and their families and explore interests, also gives them a sense of pride, identity and personal achievement, and enables them to socialise, build contacts and find support’[1]. In the critical phase of the injury, people are motivated to regain their employment status for all of these reasons. Providing money to allow them to focus on treatment does not reduce the other motivational factors, it allows fulfilment.
Making ICBC primary will mean ICBC now must assume the expenses normally incurred by other benefit sources
In the case of injured persons with additional tort claims, Work Safe BC and the various private sector accident and sickness insurers all collect premiums for this exposure but ultimately recover the amounts they have paid from the liable motorist’s basic third party liability coverage, which is always written by ICBC. The only difference ICBC’s provision of greater accident benefits coverage to tort claimants will make is that ICBC will then be able to collect that portion of the premiums now collected by other entities; and they will be able to directly administer coverage.
In the case of people that do not have a tort claim the effective administration of adequate accident benefits coverage has always been squarely within ICBC’s mandate. The proposed changes will finally fulfill the original promise of ‘no-fault insurance’.
In 1973, when the concept of government insurance was initially conceived and communicated to the public, ‘no-fault insurance’ meant the immediate delivery of wage and treatment related support to people injured in car accidents. The 2016 version of the term has come to mean the taking away of the rights of British Columbians to fair compensation for all aspects of injury related loss. We need to return to basic values. It’s not too late to honour the promise.
Premiums will increase
The public is willing, and in some cases, compelled to pay premiums for similar coverage in other aspects of their lives. Statute provides for compulsory contributions to Employment Insurance, Workers Compensation plans and the Canada Pension Plan. Employers and workers pay premiums to private sector companies through their collective agreements. Individuals pay premiums directly in self-employed situations. What the public does not want to pay premiums for is mismanagement, waste and greed. None of these negatives are encouraged in the proposals outlined here.
Widening of accident benefits coverages in the ways discussed does not necessarily mean an increase in the overall cost of Basic Insurance. The application of this approach will reduce tort severities by reducing negative injury outcomes. It is entirely likely that implementation of these ideas would lead to an overall reduction in the total amount of premium collected for Basic Insurance coverages.
Expanding Accident Benefits Coverage will weaken or even eliminate the tort system
Quite the contrary. The tort system, which operates in a precedent based, legal environment, provides truly independent recourse to institutional decisions. An increase in contractually based rights cannot replace that.
Elimination of tort rights are generally considered worthwhile in the case of WCB, where the relationship between potential litigants is more important and more enduring. Taking away tort rights from motor vehicle accident injury claimants however means we would be left with a system where the individual needs of the injured person would be subjugated to the needs of the institution created to address them; all this without a corresponding, WCB type of counter weight in that the relationship between car accident litigants is usually a one off.
The issue that is motivating elimination of the tort system today is the perception held by some that it is unnecessary and expensive. The point is valid only to the extent that the tort system is utilized to deal with obvious, short term income and treatment related losses that have already been perfected at the time of settlement. As it stands now, in the absence of adequate accident benefits coverage, the tort approach must be used to fill the vacuum on these past losses. Very expensive sledge hammers are being routinely used to swat mosquitos; to the growing annoyance of the premium payer.
On the other hand, settlement discussions on the long-term effects of injuries deal with losses that are not yet perfected and therefore are always speculative. The fact patterns are often complex. They often involve significant sums of money. In this environment, appropriate application of the law is essential to the interests of all parties. Recourse to judicial review where lawyers’ skills, both defense and plaintiff, are indispensable in the assessment of future losses. is absolutely essential.
Conclusion
A separate Accident Benefits Claims Department providing compensation for income loss and treatment and rehabilitation expenses at the time the losses are incurred and can be dealt with most effectively, is the key to eliminating the confusion, inefficiencies and excessive expense of personal injury compensation in BC. The changes suggested here are just one component of a series of overall changes necessary to reverse the consequences of the failed post-2008 claims management strategy.
[1] Paraphrased from the Fit to Work website, http://fitforwork.org