UPDATE ON CHANGES TO ONTARIO AUTOMOBILE LEGISLATION

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UPDATE ON CHANGES TO ONTARIO
AUTOMOBILE LEGISLATION
(2014 and beyond)

SEPTEMBER 11, 2014
DARCY R. MERKUR, Partner
Thomson, Rogers
dmerkur@thomsonrogers.com
416-868-3176





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Introduction

Despite now having a majority provincial government, the Ontario Liberal party has chosen to
reiterate,  post‐election,  their  intention  to  adhere  to  the  promised  15%  reduction  in  auto
insurance premiums by August, 2015.  

The government is already behind pace on the desired premium reductions after falling short of
their promised 8% premium reduction by August 2014, having only achieved a 5% reduction.  

To date, the government has focussed most of their rate reduction efforts on fraud prevention,
but  as  the  government  continues  to  fall  short  of  their  target,  attention  may  shift  to  further
benefit  reductions  and/or  the  implementation  of  a  narrower  “catastrophic  impairment”
definition.

This  paper  and  presentation  will  review  the  status  of  some  important  current  government
initiatives relating to changes in the auto insurance claims process, specifically:

1) The status of the proposed changes to the “catastrophic impairment” definition;
2) The new licence requirement for HCAI healthcare providers; 
3) The newly revised definition of "incurred"; and,
4) Bill 15 and the planned changes to the Financial Services Commission of Ontario (FSCO)
dispute resolution process and to the tort prejudgment interest rate.

In  short,  the  changes  will  result  in  accident  victims  receiving  even  less  in  no‐fault  accident
benefits,  with  healthcare  providers  earning  less  than  ever  for  providing  the  same  valued
service.


Update on CAT Definition Changes

Under  the  pretence  of  modernizing  the  “catastrophic  impairment”  (CAT)  definition  to  ensure
that the definition only captures those with the most serious injuries, the government has been
considering  an  overhaul  of  the  definition  of  “catastrophic  impairment”  as  set  out  in  the
Statutory Accident Benefits Schedule (SABS).

The  definition  proposed  would  significantly  narrow  the  CAT  definition  and  would,  most
significantly,  remove  the  ever  popular  GCS  test.    More  information  about  the  proposed
definition is set out in my previous paper entitled “Update on the Anticipated Changes to the
Definition  of  Catastrophic  Impairment”  (available  online  at  www.thomsonrogers.com/drm‐
catastrophic‐impairment‐bts‐2013).

The  proposed  CAT  definition  resulted  in  an  outcry  of  concern  by  stakeholders.    The  concerns
raised  included:  the  appropriateness  of  some  of  the  medical  tests  proposed,  the  thresholds
proposed,  the  practical  implications  resulting  from  the  elimination  of  the  GCS  test,  the Page | 3
challenges with interim designations, the delays with treatment that can result from a delayed
designation and the need for upheaval in the face of stability, amongst other concerns.

As a result of the overwhelming response, the government’s initiative has been stalled.  Stated
simply, while the government has an interest in revising and narrowing the CAT definition they
are uncertain as to how to do it in a way that responds to the valid concerns raised.  

It  is  unclear  what  will  happen  next  with  the  catastrophic  impairment  definition.    Will  it  be
revisited again in the near future?  Will the government simply adopt the proposed revised CAT
definition with minimal amendments?  

It  can  be  expected  that  the  government’s  soon  to  be  released  Three  Year  Review  on  Auto
Insurance  will  recommend  that  the  changes  to  the  CAT  definition  be  revisited  as  soon  as
possible,  in  keeping  with  the  recommendation  in  the  previous  Five  Year  Review.    What  will
follow thereafter is unknown.


FSCO Licences for Healthcare Providers

As part of its anti‐fraud initiative, the government is requiring all HCAI (Health Claims for Auto
Insurance)  participants  to  be  licensed  through  FSCO  in  order  to  continue  to  invoice  through
HCAI. 

While the idea of licensing is not in and of itself controversial, the fee structure and the fees
themselves are seen by many as offensive and unnecessary‐the fees charged seem to have no
intuitive connection to the laudable goal of fraud prevention.

FSCO has advised that those that have applied for a license by August 31, 2014 will have their
licenses addressed before the mandatory license date of December 1, 2014.   As of December 1,
2014, only licensed providers can submit invoices through HCAI.  The OCF forms have already
been modified to include the new license information.

Information about licensing, provided by FSCO, including their Frequently Asked Questions, is
attached at Schedule “A” to this paper.

The fees charged include a one‐time license fee of $337, plus a fee for each unique SABS file of
$15, plus an additional $128 for each different business location (see fee information at page 20
of Schedule “A”).

The license fees may cause those with smaller motor vehicle practices to avoid HCAI altogether
and to consider means to collect from patients while letting the patient seek recovery from the
insurer.   
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The  per  file  fee  will  serve  to  reduce  margins  for  healthcare  providers  and  may  dissuade
providers from participating in claims, and paying the $15 per file fee, where they would have
very minimal one‐time type involvement.

While  it  is  clear  that  the  fees  will  serve  to  increase  the  cost  of  doing  business  for  healthcare
providers, it is unclear how and whether the fees will impact fraud in any way.


The Newly Revised Definition of "Incurred" 

Without any consultation, the government implemented a change to the already new definition
of ‘incurred’ within the SABS, effective February 1, 2014.

The change serves to reverse a court decision that had made it clear that any ‘economic loss’
triggered  entitlement  to  benefits  in  accordance  with  the  new  definition  of  ‘incurred’  without
regard to the extent of that ‘economic loss’.  

The  amendments  now  require  the  person  providing  the  care  to  establish  the  extent  of  their
economic loss, as they are now only eligible to be compensated by the accident benefit insurer
to the extent of that economic loss.  

Practically speaking, it is virtually impossible in most circumstances to prove the precise extent
of the ‘economic loss’.  The insurer is in an advantageous position to delay and deny benefits
while pressing the already overwhelmed provider to substantiate the extent of their economic
loss  (knowing  the  challenges  in  proving  missed  available  overtime,  foregone  work
opportunities, bonus entitlement impacts, lost promotions and salary increases, etc.) 

The result of the change is that attendant care services must now, in most circumstances, be
outsourced to professional attendant care providers in order to clearly meet the definition of
‘incurred’.  

Unfortunately, because the standard hourly rate of a professional care provider is much more
significant than the minimal hourly rates available for attendant care services under the SABS,
only some needed attendant care services can be professionally provided within the monthly
attendant  care  maximums,  leaving  the  family  providing  significant  attendant  care,  without
immediate pay.    Of  course,  the  value  of  attendant  care  services  provided  by  family  members
can be claimed in lawsuits against at‐fault drivers but those claims often take years to resolve
leaving the family uncompensated and struggling physically, financially and emotionally in the
interim.
 



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Bill 15 and the Planned Changes to FSCO and Tort Prejudgment Interest (PJI)

The government has been considering drastic changes to the FSCO dispute resolution process,
having  commissioned  The  Honourable  Mr.  Justice  Douglas  Cunningham  to  make
recommendations for changes to the dispute resolution system.

Justice  Cunningham’s  report,  entitled  “Ontario  Automobile  Insurance  Dispute  Resolution
System  Review”,  was  released  in  February,  2014.    The  final  report  is  available  at
http://www.fin.gov.on.ca/en/autoinsurance/drs‐final‐report.pdf.

Immediately following the release of Justice Cunningham’s report, the government introduced
proposed changes to the FSCO dispute resolution process.  And, as an unwelcome part of that
initiative, the government snuck in an amendment to auto insurance legislation that removes
the  favourable  5%  prejudgment  interest  rate  that  applied  to  damages  for  pain  and  suffering
(replacing it with a fluctuating market‐based interest rate that has in the last several years been
just 1.3%).  

The interest rate reduction will serve as an incentive for tort insurers to delay tort resolutions
as  insurers  can  expect  to  earn  more  investing  their  money  compared  to  the  miniscule  1.3%
extra they will owe to the claimant on their general damage award for pain and suffering.  The
favourable 5% interest rate had previously influenced tort insurers to resolve claims early and
efficiently, especially ones comprised primarily of general damages. 

While  the  FSCO  dispute  resolution  changes  along  with  the  interest  rate  change  were  stalled
when  the  election  was  called,  now  that  the  election  is  behind  us  the  legislative  changes  are
currently  being  advanced  in  Bill  15.    Bill  15  has  passed  first  reading  and  is  expected  to  pass
through the legislature and committee hearings without difficulty in the months to come. 

In addition to the reduction of the prejudgment tort interest rate (for general damages), Bill 15
serves  to  eliminate  FSCO  and  replace  it  with  the  License  Appeal  Tribunal.  In  doing  so,  the
legislation removes the right of accident victims to dispute accident benefit issues in the courts. 
The new process would eliminate the current right for accident victims to choose to raise their
disputes with either FSCO or the courts, forcing the process into the Tribunal. 

The  License  Appeal  Tribunal  currently  deals  with  a  broad  variety  of  issues  including
administrative driver’s license suspensions.  However, it is not currently well structured to deal
with the volume of accident benefit disputes currently before FSCO nor the specialized nature
of these accident benefit disputes.

Bill  15  does  not  get  into  specifics  as  to  how  the  dispute  resolution  process  would  change.    A
further  Regulation  will  be  required  to  outline  the  logistics  of  the  new  dispute  resolution
process.  
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It remains unclear how this new dispute resolution process would be better for accident victims
and whether it will in fact be better at all.  

Stakeholders are sceptical that a new dispute resolution process will be an improved process. 
The  concern  remains  that  a  new  process  will  lead  to  new  problems,  less  certainty  over
outcomes and even more delays.  

Most importantly though, the elimination of access to the courts is a real source of frustration
for plaintiff’s personal injury lawyers.  

Unlike administrative bodies, the courts are seen as having significant discretion to do what is
right under the circumstances.  Accident victims have taken comfort knowing that they can ask
a  judge  to  hold  an  insurer  accountable  if  they  acted  irresponsibly.    Access  to  the  courts  is
viewed as a fundamental right and is necessary in this context to ensure both fairness and the
appearance of fairness.

In  addition,  the  court  process  allows  for  the  possibility  of  the  insurer  being  ordered  to  make
significant  legal  cost  contributions  if  the  insurer  is  acting  irresponsibly.  Those  significant  cost
contributions may not be available in the new dispute resolution process, resulting in possible
further financial burden on claimants.


Conclusion

The new majority Ontario government is unfortunately in a strong position to make whatever
changes it likes to auto insurance legislation.  They need not fear a snap election.   

But lobbying must continue.  

Accident  victims  must  continue  to  express  concern  and  frustration  with  changes  that  reduce
benefits,  delay  access  to  benefits  and  make  it  even  harder  to  effectively  stand  up  to  the
powerful insurers.

Monitor  www.thomsonrogers.com  for  updates  on  auto  insurance  changes  and  for  more
information.



DARCY R. MERKUR, Partner
Thomson, Rogers
dmerkur@thomsonrogers.com
416-868-3176