Ontario Auto Insurance: Accident victim Wins Challenge to Ontario’s $3,500 Minor Injury Cap

Update: see previous posts – March 2, 2013 Ontario: If Auto-Insurance Premiums Are Not Lowered, Ontarians May Face Spring Election, February 5, 2013 Ontario: Time to Reduce Auto-Insurance Premiums for All Ontario Drivers, August 29, 2010 Auto Insurance Companies Whine about Medical Costs, August 22, 2010 Auto Insurance Rules Change September 1, 2010 (Ontario), November 13, 2009 Home Insurance Skyrockets in Ontario, November 5, 2009 Liberals Take Care of Ontario’s Auto Insurance Companies, October 5, 2009 Ontario Liberals Support Auto Insurance Profits, July 19, 2009 Insurance Rates Skyrocket in Ontario, June 11, 2009 Insurance Companies exercise discrimination due to “perceived genetic risks”., May 18, 2009 Ontario Auto Insurance – Reducing Accident Benefits from 100 to 25 Thousand Dollars.

In 2010, Ontario tried to reduce costly auto insurance claims by putting a cap on minor injury benefits at $3,500.
On September 18, 2010 while sitting as a passenger in a vehicle that was insured by Belair Insurance, Mr. Lenworth Scarlett was injured when the vehicle he sat in was rear-ended.  He applied for auto insurance benefits with Belair Insurance Company Inc. Under the minor injury guidelines (MIG) only $3,500 are offered.  Mr. Scarlett applied for benefits outside of the minor injury guidleines and Belair Insurance denied those benefits.  Mr. Scarlett proceeded to FSCO’s arbitration on February 22, 2013 and argued in front of arbitrator Wilson that he was entitled to these benefits applied for.  On March 26, 2013 Arbitrator ruled that Mr. Scarlett was entitled to these benefits that exceeded what he was entitled to under the minor injury guidelines. Photo by Ron Bull / Toronto Star via GETTY IMAGES

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The Ontario government’s insurance reforms that limited a car accident victim’s benefits have been redefined in a recent legal case.

In September 2010, the Ontario government reduced the medical benefits you could get under your car insurance policy for injuries suffered in a motor vehicle accident.

The $100,000 limit for treatments not covered by the health care system was reduced to $50,000. But for accident victims who had minor injuries, such as strains, sprains and whiplash, the $100,000 limit was slashed to $3,500.

The $3,500 cap was designed to stop unscrupulous rehabilitation providers from making you come back for more and more treatments.

And while you could opt to pay higher premiums to boost your benefits beyond $50,000, you were stuck with the $3,500 minor injury limit — whether you wanted to pay more or not.

The massive cuts were supposed to lead to lower rates, but most people still pay as much as before. The pressure to bring down car insurance costs has led Ontario Premier Kathleen Wynne to promise relief in the next budget .

Last month, the Financial Services Commission of Ontario (FSCO) ruled in favour (see: Lenworth Scarlett and Belair Insurance Company Inc. [FSCO A12-001079] ) of an automobile accident victim who claimed expenses beyond the minor injury limit. In his decision on a preliminary issue, dated March 26, 2013 Arbitrator John Wilson relied upon Ontario Regulation 34/10.

Lenworth Scarlett, a passenger insured by Belair Insurance, was in a vehicle that was rear-ended on September 18, 2010 argued at the FSCO arbitration hearing in Toronto on February 22, 2013 that in addition to strains, sprains and whiplash, he also had pre-existing injuries and subsequent psychological difficulties.

As a result, he wanted to claim housekeeping, attendant care, medical and rehabilitation expenses beyond the $3,500 cap.

While Scarlett had soft tissue injuries, he may have had other conditions that weren’t soft tissue injuries, said FSCO arbitrator John Wilson. It wasn’t at all clear that the victim’s injuries from the accident were minor in nature.

“It makes no sense if the insurer is positioned to veto access to benefits on the basis of the delivery of a single report, in the face of credible evidence to the contrary, when the resulting delay in treatment could last for years,” Wilson wrote.

“This runs contrary to both the spirit of the accident benefit scheme and the stated purpose of the (minor injury) guideline itself.”

The key concept is the burden of proof, says personal injury lawyer Stanley Pasternak.

“The onus is not on the injured person to show the injuries fall outside the minor injury guideline,” he explains. “The onus is on the insurer to show the injuries fall inside the minor injury guideline.”

Under insurance law, a company that excludes something from coverage has to be very precise. Any ambiguity goes in favour of the insured person.

The $3,500 minor injury cap is seen as an exclusion from the $50,000 limit for accident benefits. This means the burden of proof is on the insurer.

“If you provide credible evidence that your injuries are more than the strains, sprains and whiplash covered by the $3,500 limit, the insurance company has to prove you’re wrong,” Pasternak says.

The arbitration decision in Scarlett vs. Belair is the first to consider the minor injury guideline, said FSCO spokeswoman Kristen Rose.

“Arbitration decisions may be appealed and as this process has not been exhausted, further comment on this decision would be inappropriate.”

The current minor injury guideline was introduced as a temporary measure. Work is under way to develop a new treatment protocol for minor injuries, based on medical and scientific evidence, Rose explained.

Here’s the good news. Since 2010, thousands of accident victims have been denied benefits by insurers that put them into the minor injury category without proper medical support.

The FSCO ruling gives back rights to accident victims. It says that an insurer’s early determination of a person’s entitlement to treatment beyond the $3,500 cap is “an interim one” that is “open to review.”

There is no doubt that the Insurance Bureau of Canada will quickly go to work behind the scenes to lobby their friends in the Liberal leadership, to change these rules again and to close any loopholes to prevent this happening again.

The upcoming budget to be released on May 2, 2013 will incorporate a 15% reduction for those with auto insurance in Ontario. The Insurance Bureau of Canada  has already threatened lay-offs if this reduction is put into place (in 1990 when Premier Bob Rae talked about taking private insurance companies out of the auto-insurance industry and replacing it with public auto insurance – the Insurance Bureau of Canada threatened to lay-off thousands of workers and Rae backed-off the proposal.  In Ontario recently, we saw the government transition from GST to HST and when that occurred, the GST workers were let go and re-hired to administer the new HST – it was a seamless transition.  This is the same process that could be used if Ontario was to institute Public Auto Insurance, as is the reality in many Provinces across the nation) and we will have to wait to see what happens.  On its’ website, the Insurance Bureau of Canada admits that it has a total premium base of $44 billion dollars, approximately half of which is derived from auto insurance.

Here is an exerpt from their website:

Established in 1964, Insurance Bureau of Canada is the national industry association representing Canada’s private home, car and business insurers. Its member companies represent 90% of the property and casualty (P&C) insurance market in Canada. The P&C insurance industry employs over 115,000 Canadians, pays more than $7 billion in taxes to the federal, provincial and municipal governments, and has a total premium base of $44 billion, approximately half of which is derived from automobile insurance.

The Insurance Bureau of Canada lists “lobbying” the Federal and Provincial governments as one of their roles for their members. The term “lobbying” must also represent making financial contributions to parties and members of those parties, who they believe will make decisions and change laws that benefit the insurance industry in Canada.

In the recent leadership race of the Liberal Party of Ontario, the Insurance Bureau of Canada contributed $60,000.00 to the leadership frontrunners. The Insurance Bureau of Canada made the following contributions:

1. $25,000 to Kathleen Wynne (who happened to be elected on Jan.26/13, on the third ballot, as Ontario’s next Premier)

2. $25,000 to Sandra Pupatello (who had to wait to the third ballot to learn that her rival Wynne had secured victory)

3. $10,000 to Dr. Eric Hoskins

4. $500 to Charles Sousa

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