Insurance News - Wednesday, April 30, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, April 30, 2014:

• Having mastered 700,000 miles of freeways driving, Google self-driving cars are now driving themselves in congested city streets.
• Colorado passes bill legalizing ride-sharing which will now require insurance coverage, vehicle inspections and driver background checks.
• Wal-Mart now offers price comparison shopping for auto insurance in the U.S.
• Ontario ombudsman warns that driving with medical conditions can be deadly.

Evidence Required to Dismiss a Non-Earner Benefits Claim

In Willoughby v.Dominion of Canada General Insurance Co, 2014 ONSC 1136 (S.C.J.), the plaintiff sustained injuries in a motor vehicle accident on July 8, 2004. The plaintiff settled her claim for income replacement benefits with her insurer and proceeded to bring a claim for non-earner benefits.

The insurer brought a motion for summary judgment on the basis that the plaintiff did not satisfy the test for non-earner benefits. To support the motion, the insurer submitted an affidavit relying on the oral evidence given by the plaintiff at her examinations for discovery that showed she had continued to engage in her pre-accident activities. The plaintiff opposed the motion and submitted an Affidavit sworn by the plaintiff, a report of a neurologist and a report from an occupational therapist, all highlighting the differences in her pre and post-accident life. The insurer did not cross-examine on the affidavit nor did they submit an affidavit in response. Given this the court held that the evidence provided by the plaintiff would be considered undisputed.

In their reasoning, the court relied on the Ontario Court of Appeal’s decision in Heath v. Economical [2009] O.R. (3d) 785 for the general principle that in cases where pain is a primary factor preventing the claimant from engaging in substantially all of her pre-accident activities the question is not whether the insured is physically able to do these activities, but whether the degree of pain experienced is such that the claimant is practically prevented from engaging in those activities. The court applied a qualitative perspective requiring the activities to be viewed as a whole and held that the evidence led by the insurer was insufficient. Therefore the motion was dismissed.

Willoughby indicates the high standard courts will apply in summary judgment motions to dismiss applications for non-earner benefits. Defendants who bring such motions should not merely rely on the plaintiff’s evidence provided at examinations for discovery to satisfy the court’s qualitative approach.  

FSCO Releases A Draft Statement Of Priorities For 2014

Section 11 of the FSCO Act requires FSCO to deliver to the Minister of Finance and publish in The Ontario Gazette by June 30th of each year, a statement setting out the proposed priorities of the Commission for the fiscal year in connection with the administration of this Act and all other Acts that confer powers on or assign duties to the Commission or the Superintendent.

 FSCO has released a draft Statement of Priorities for 2014 and invites stakeholders to submit comments on the proposed priorities and initiatives by May 30, 2014. The draft is loaded with auto insurance initiatives which reflects the high level of activity on this file by the government over the past few years. Here is a summary of the auto insurance initiatives:

Licensing Business Systems and Business Practices of Service Providers 

In the 2013 Ontario budget, the government committed to take further action to tackle fraud in the auto insurance sector. Among other measures, the government expanded FSCO’s mandate to include the licensing and regulation of the business systems and business practices of healthcare service providers that directly invoice auto insurers for statutory accident benefits. In 2014, FSCO plans to launch a licensing regime to reduce fraudulent billing practices in the sector.

Develop Minor Injury Treatment Protocol 

FSCO has contracted scientists and medical experts to develop an evidence-based protocol to treat auto accident claimants who sustain minor injuries. The protocol will inform the Superintendent when developing a revised Minor Injury Guideline.

Support the Ministry of Finance in the implementation of a Cost and Rate Reduction Strategy for auto insurance 

Work with Ministry of Finance on statutory and system reviews 

In 2013, FSCO commenced a consolidated three year review of Part VI (Auto Insurance) of the Insurance Act, and related regulations. Once the review is complete, FSCO will submit a report to the Minister of Finance in the Fall, 2014.

Design and implement an information technology Enterprise Development Program 

A new web-based information management platform will provide FSCO with the required tools to effectively regulate in an increasingly challenging financial marketplace, while providing stakeholders with centralized access to the services they expect. The first phase will be launched in Spring 2014 to complement licensing of the healthcare service providers sector.

Work with the Ministry of Finance on the Dispute Resolution System Review implementation 

Enhance auto insurance information and analysis 

• Examining factors contributing to cost changes in third-party liability bodily injury, and releasing a final report on the findings in 2014. 
• Reviewing actuarial data to gauge the effect of the automobile insurance reforms, and studying the effect of the reforms on automobile insurance rate levels. 
• Working with the General Insurance Statistical Agency to collect Ontario’s 2013 auto insurance statistical data, and analyzing the data to monitor automobile insurance cost changes and to review the reasonableness of automobile insurance rates. 
• Reviewing the Health Claims for Auto Insurance system to determine reports necessary to provide additional information on statutory accident benefits treatment trends.

Implement fraud awareness stakeholder engagement strategy

Provide information to consumers about fraud prevention 

Review and implement requirements for usage-based auto insurance

Insurance News - Tuesday April 29, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday April 29, 2014:

• Usage-based insurance confers competitive advantages to early users.
• California legislature introduces ride-sharing bill which clarifies service is a commercial activity for insurance purposes.
• Meanwhile, the Arizona Governor vetoes a bill mandating drivers subsidize ride-sharing companies.
• The reality is that Uber and Airbnb cut out the middleman. Why are governments so rattled?
• SGI is seeking input from the public and stakeholders in a comprehensive review of its auto injury program.

Insurance News - Thursday April 24, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday April 24, 2014:

• According to analysis of consumers getting online quotes by Kanetix those using online quoting services are now older and using mobile devices.
• The IBC is making the rounds talking up Bill 171 to MPPs but are they listening?
• Of course MPPs are more focused on a spring election.  Speaking of which the projected outcome will likely satisfy no one. The Liberals would likely win 43 seats with 41 seats going to the Conservatives and 23 setas going to the NDP.
• As data about drivers proliferates, auto insurers look to adjust rates. Opposition to using socio-economic factors heats up in the U.S.

Substantial Indemnity Costs for Unsubstantiated Bad Faith Claim

In Sagan v. Dominion of Canada General Insurance Company, 2014 CanLII 16478 (SC.J.), the defendant insurer successfully moved to dismiss the plaintiff's claim for non-earner benefits and mental distress.  The claim continued "a litany of unsupported allegations of bad faith, misconduct and incompetence against the defendant".  There was no evidence to support the allegations and they were maintained right up until the hearing of the motion.

Justice Lofchik awarded substantial indemnity costs for the motion itself, and partial indemnity costs for the remainder of the action.  He held that substantial indemnity costs may be appropriate where a party makes empty bad faith allegations.  The purpose is to diminish frivolous and speculative litigation, to cause litigants to focus on the real issues and to foster sober reflection above that of an emotional response.

Although brief, Sagan is a useful decision, especially where plaintiffs commonly throw in allegations of bad faith where an insurer denies a claim.

OWCP and ICD-10 CM/PCS

The implementations of ICD-10 promises to create havoc and anarchy in the OWCP process as accepted conditions get reinterpreted, likely to the detriment of injured workers. Fortunately, we have a brief reprieve. Due to overwhelming concerns in the medical community as to the effect of this change, President Obama recently sign the SGR Patch bill, HR-4302, which delayed ICD-10 CM/PCS implementations until October 1, 2015.

Although there is a delay in the implementation of ICD-10 CM/PCS, OWCP is still requiring that providers use the revised HCFA 1500 claim form (version 2/12) to report services rendered using the current ICD-9. The implementation of ICD-10 promises to bring additional havoc and confusion to an OWCP process that places tremendous burdens and hurdles on injured workers who frequently have difficulty finding physicians who are willing to accept their cases due to OWCP operating a system that is designed purely for the convenience of those running OWCP with little if any consideration of the needs of injured workers and medical providers. Current versions of OWCP approved forms for FECA cases can be found through their website at the following location:

http://www.dol.gov/owcp/dfec/regs/compliance/forms.htm

Insurance News - Thursday April 17, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday April 17, 2014:

• FSCO reports that first quarter 2014 rate filings decreased by an average of 5.01% for the 14 rate filings (20.22% of the market) it approved.  This works out to a decrease of 1.01% for the entire Ontario market. According to my calculations, rate approvals have declined 5.57% since Rate Reduction Strategy was announced in August.
• Despite a few inaccuracies, an interesting Globe and Mail article about Ontario's dysfunctional auto insurance system.  The only thing all stakeholders agree on is the system is still broken.
• The province's branding program not working because according to this news report, wrecked vehicles being resold to unsuspecting consumers.
• Here is something to be concerned, 8 out of 10 drivers incorrectly believe hands-free cellphones are safer than hand-held use.
• Insurance industry critics in the U.S. are not happy with the practice of using data mining (referred to as price optimization) to set auto insurance rates.

Insurance New - Wednesday April 16, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday April 16, 2014:

• A group of Quebec brokers come out supporting usage-based auto insurance programs, as long as they are voluntary.
• In the U.S., Dodd-Frank reforms creates new U.S. government office to monitor availability and affordability of auto insurance in minority and low-income communities.
• Fraud continues to be a problem in New York State where an insurance association urges legislature to adopt a zero tolerance policy for fraud at a State Assembly hearing.
• A joint study by researchers at the University of California, San Diego, the University at Buffalo, and the University of Toronto has found that a computer–vision system can distinguish between real or faked expressions of pain more accurately than can humans.
• B.C.'s provincial auto insurer to pay back $39 million in overcharged fees.

Ontario Moves Forward on Regulating the Towing Industry

This week the Ontario government introduced Bill 189, the Roadside Assistance Protection Act, which, if passed, will finally introduce a regulatory scheme to the towing industry. This will be welcome news to consumers, insurance companies and honest towing companies.

The bill amends the Consumer Protection Act, 2002 and brings towing under the responsibility of the Minister of Consumer Services.  It comes following the establishment of stakeholder advisory groups and a public consultation process. The bill does not follow the recommendations of the Automobile Insurance Anti-Fraud Task Force, in that it does not create a new self-regulating body for the towing industry.  In the end, it was determined that the Task Force's recommendation was not feasible.  Instead, the towing industry will fall under the responsibility of the Commercial Vehicle Operator's Registration (CVOR) system.  The CVOR currently is responsible for large trucks and buses.  Technically the Registrar of Motor Vehicles becomes the regulator since the Registrar will have the authority to cancel a CVOR certificate.

The bill amends the Consumer Protection Act, 2002 to regulate consumer transactions involving tow and storage services. As examples, rules are provided for respecting:

1. Disclosure of information to consumers. 
2. Requirements that tow and storage services provided to consumers be authorized. 
3. Deviating from estimated payment amounts. 
4. The provision of itemized invoices.
5. Insurance requirements.  
6. Publication of rates. 
7. A Tow and Storage Consumers Bill of Rights. 
8. Requirements that consumers be allowed to remove personal property from towed or stored vehicles. 
9. The establishment of qualifications for tow and storage providers. 

The Act is also amended to provide for the appointment of inspectors and inspection powers, and to permit the Director to establish policies regarding the interpretation, administration and enforcement of the Act. The Repair and Storage Liens Act is amended to reflect the amendments to the Consumer Protection Act, 2002.

The Highway Traffic Act is amended in two main areas: the regulation of commercial motor vehicles and tow trucks and enforcement of the Act generally by the addition of administrative penalties. In respect of commercial motor vehicles, the Act is amended as follows:

1. To repeal the definition of “commercial motor vehicle” in subsection 16 (1) of the Act and replace it with the authority to define the term by regulation. 
2. To move other definitions related to “commercial motor vehicle” (“compensation”, “CVOR certificate”, “goods” and “safety record”) from subsection 16 (1) to subsection 1 (1), so that they apply to the whole Act and not only to sections 16 to 23.1, as currently provided. 
3. To provide for additional regulation of commercial motor vehicles. Provisions and regulation-making powers are added: prescribing requirements, qualifications and standards for commercial motor vehicles and for owners, operators and drivers of commercial motor vehicles; respecting documents and information to be carried by drivers and to be filed with the Ministry; adding grounds to refuse to issue, replace or renew a CVOR certificate; and requiring specified classes of owners and operators of commercial motor vehicles to install in their vehicles devices that are capable of recording and transmitting data about vehicle operation and driver conduct. 
4. To allow the Registrar of Motor Vehicles to order the immediate suspension or cancellation of a CVOR certificate where the Registrar has reason to believe that the certificate holder’s safety record or failure to comply with any Act demonstrates a significant risk to road safety and that it is in the public interest that the operator immediately cease operating all commercial motor vehicles. 
5. To prohibit drivers and other persons in charge of tow trucks from engaging in activities prescribed by regulation. In respect of general enforcement, the Act is amended to provide for the imposition of administrative penalties for the contravention of prescribed provisions of the Act and regulations. The amount of the penalties may not exceed $20,000.

Courts Have Inherent Jurisdiction to Order Assessments by Non-Health Practitioners

For several years, there have been two streams of cases regarding whether courts can order independent medical assessments by non-health practitioners under s. 105 of the Courts of Justice Act and r. 33.  The Divisional Court considered the issue in Ziebenhaus v. Bahlieda, 2014 ONSC 138 (S.C.J.).

The Court held that court have inherent jurisdiction to order physical or mental examinations by non-health practitioners.  The inherent jurisdiction is to be exercised to further trial fairness and justice.  There is no automatic rule that "levels the playing field" by providing the defendant is entitled to each type of report that is obtained by the plaintiff.  The focus is on the need for a particular examination in order to meet the plaintiff's case.

Ziebenhaus provides guidance on an area that has called out for clarification for some time. Defendants who bring motions to compel IMEs should make sure they address how the proposed assessment will further trial fairness and justice.  It may be that it will become easier to obtain IMEs with future care cost assessors, occupational therapists and so forth than in the past.

Action Against Municipality Dismissed for Failure to Give Notice

The new test for summary judgment as set out in the Supreme Court in Hryniakhas been applied to dismiss a claim against a Municipality for failing to give notice as required by s. 44(10) of the Municipal Act.

In Hennes v. City of Brampton, 2014 ONSC 1116 (S.C.J.), the plaintiff slipped and fell on an icy sidewalk.   He did not give notice until 18 months after the fall, contrary to s. 44(10) which provides for a 10 day notice period.  The plaintiff admitted he knew the City owned and maintained the sidewalk and that ice caused his fall.  He claimed he had a reasonable excuse for failing to give notice as he did not know how serious his injuries were until months after the fall. 

The Court did not accept that the plaintiff had a reasonable excuse; he did not seek advice about his rights or obligations for over a year after a claim was apparent.  In addition, the plaintiff bore the onus to show the Municipality was not prejudiced by the failure to give notice, and he failed to do so.  The plaintiff did not take timely photographs, and had not disclosed the contact information or a summary of a potential witness.  The action was dismissed. 

Hennes is a good example of how the new summary judgment rule can be used to dispose of a claim at an early stage. 

US District Court holds that suit between insurers should be transferred to district where accident occurred

Ohio Casualty Insurance Company, an excess insurer, sued Twin City Fire Insurance Company, a primary insurer, for breach of the duty of good faith and fair dealing for failing to settle a motor vehicle accident case within the policy limits.


The accident occurred in New York.  Ohio Casualty is an Ohio Corporation with its principal place of business in Boston.  Twin City is an Indiana corporation with its principal place of business in Hartford.


Twin City moved to transfer the case to the Eastern District of New  York.  In Ohio Casualty Ins. Co. v. Twin City Fire Ins., 2014 WL 495650 (D. Mass.), the court allowed the motion.  It noted the only connection of Massachusetts to the dispute is that Ohio Casualty's principal place of business is here, while a substantial amount of the relevant evidence is likely to be located in New York, where the underlying tort and jury trial occurred and where the underlying trial attorneys are located.   

Duty to Defend - Extrinsic Evidence Not Permitted

In Liardi v. Riotrin Properties (Kingston) Inc., 2013 ONSC 7544 (S.C.J), the defendant, Future Shop, brought a motion for a declaration that Zurich had a duty to defend the underlying action.  The issues on the motion were whether the plaintiff's pleadings raised covered and non-covered claims, and whether extrinsic evidence could be admitted in enlarge or explain the pleadings.

In the main action, the plaintiff alleged he bought a television at Future Shop and was instructed to move his car to the back of the store to load it.  An employee was having difficulty lifting the television so the plaintiff got out of his car to assist.  He alleged he slipped on ice and fell as he was walking to the rear.  The allegations against Future Shop included that it failed to have adequate persons to load the television, knew a dangerous condition existed and failed to ameliorate it, failed to ensure the premises were properly salted/sanded, and failed to properly monitor the area.

The landlord, Riotrin, was responsible for common areas under the lease.  Future Shop was named as an additional insured on the landlord's policy with Zurich.

Zurich sought to introduce extrinsic evidence as to the way Future Shop operated its businesses, including policies with respect to loading merchandise into customers' cars.  Justice Tausendfreund refused to admit the evidence as it touched on matters at issue against Future Shop which might prejudice Future Shop or bring it into conflict with the insurer.

Justice Tausendfreund held there was a duty to defend.  The plaintiff fell on snow and ice in the parking lot and the reason he did so was not relevant.  The claim did not relate to the way Future Shop did business but rather to the condition of the parking lot.  

When deciding duty to defend motions, courts will look at the essence of a claim.  It may be difficult to show that certain parts do not require a defence unless there are clear claims that could stand on their own.

OWCP and balance billing

Balance billing is a phrase that describes the situation where a medical provider tries to collect the amount that their bill was reduced when OWCP paid the provider's bill based upon the fee schedule. If a doctor charges $200 for an office visit, OWCP pays that bill in the amount of $120, and the provider then tries to collect the "balance" of $80 from you, that is called balance billing. Medical providers who accept payments in FECA cases are prohibited from balance billing and can be debarred for engaging in this practice. A medical provider agrees to accept what OWCP pays for a service and is not allowed to try to collect the balance from you. See 20 CFR 10.813: If OWCP reduces a fee, may a provider bill the claimant for the balance? A provider whose fee for service is partially paid by OWCP as a result of the application of its fee schedule or other tests for reasonableness in accordance with this part shall not request reimbursement from the employee for additional amounts. (a) Where a provider's fee for a particular service or procedure is lower to the general public than as provided by the schedule of maximum allowable charges, the provider shall bill at the lower rate. A fee for a particular service or procedure which is higher than the provider's fee to the general public for that same service or procedure will be considered a charge “substantially in excess of such provider's customary charges” for the purposes of §10.815(d). (b) A provider whose fee for service is partially paid by OWCP as the result of the application of the schedule of maximum allowable charges and who collects or attempts to collect from the employee, either directly or through a collection agent, any amount in excess of the charge allowed by OWCP, and who does not cease such action or make appropriate refund to the employee within 60 days of the date of the decision of OWCP, shall be subject to the exclusion procedures provided by §10.815(h).

Corruption alleged in FEMA flood map changes

According to NBC News, FEMA has changed flood zone maps to drastically lower insurance premiums of owners of ocean-front, flood-prone properties.