Insurance News - Saturday, January 31, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, January 31, 2015:

• To the list of jobs threatened by the Internet, you can now add independent insurance agents and brokers.
• It appears that Google cars drive on snow and ice like every Torontonian - like it was the first time seeing the stuff.
• Here are five pieces of technology your car may already have which are expected to evolve towards driverless cars.
• It is estimated that driverless cars could save Canadians $65 billion a year through fewer accidents, fuel savings, less congestion and reduced time on the road.
• Uber has suspended some drivers in California who registered cars for commercial use. But the DMV says that only cars with commercial registrations may carry passengers for hire in the state.
• Uber Toronto GM alleges 26 licensed Toronto taxi drivers failed to meet Uber standards thereby suggesting Uber has higher standards.

Court of Appeal Releases Decision in Moore v. Getahun

The 2014 decision of Moore v. Getahun created quite a stir in Ontario's litigation bar when Justice Wilson held that it was improper for counsel to review and discuss draft reports with experts.  The Court of Appeal released its appeal of the decision January 29, 2015.  You can access the decision by clicking here.

The Court disagreed with the trial judge. There held there is nothing improper about "this longstanding practice."  Sharpe J.A. noted that the trial judge's decision is contrary to existing cases which say communication with the expert can actually help ensure an opinion is admissible, coherent and comprehensive.  There are safeguards built into the system: counsel cannot persuade an expert to change an opinion and it still needs to be objective.

Draft reports and notes of meetings and other communications are litigation privileged and do not have to be produced, absent a reasonable suspicion the expert was improperly influenced.  The foundational information used in formulating the opinion must still be produced.

This common sense decision will be welcomed by many on both the plaintiff and the defence side.

Changes to the Rules Regarding Appeals

A number of changes to the Rules of Civil Procedure came into effect on January 1, 2015.

One of the changes is with respect to obtaining leave to appeal an interlocutory Order of a judge.  The former rule 62.02 provided that a notice of motion for leave to appeal must be served within seven dates of the Order.  The new rule is a substantial change: r. 62.02(2) provides that the motion for leave to appeal shall be heard in writing.

The change may reduce costs in that it eliminates the need for an argued motion.  The test for such appeals remains the same: a conflicting decision and desirable that leave be granted, or good reason to doubt the correctness of the decision and an appeal involving matters of such importance that leave to appeal should be granted.  

U.S. District Court holds Progressive automobile policy website violates 93A

Named plaintiffs in a putative class action suit purchased automobile insurance from Progressive Insurance Company.  Some purchased the policies by telephone and others through the Progressive website.  All were subsequently denied PIP benefits because their policies had an $8,000 PIP deductible.  They sued Progressive alleging that they purchased the policies with a deductible because of Progressive's unfair and deceptive acts and practices. 

From 2008 to 2010 Progressive's website gave Massachusetts customers the opportunity to answer a series of questions.  If they indicated that they or their household members did not have health insurance, it generated plans and quotes with no PIP deductible.  If they indicated that they and their household members all had health insurance, it generated plans and quotes that included an $8,000 PIP deductible.  The customers could then choose different options on the website and compare premiums.  The deductible changed the policy price by $3.00.  A customer who chose an $8,000 PIP deductible for himself or herself could purchase $8,000 PIP coverage for household members for no additional charge.

Progressive knew that PIP deductibles were not customary in Massachusetts.  Approximately 90 percent of Massachusetts insureds purchased PIP with no deductible whether or not they had health insurance.  In June, 2008 Progressive held a focus group that found that customers did not understand the PIP deductible. 

In 2009 Progressive began receiving formal complaints through the Massachusetts Department of Insurance from customers who had bought policies with a PIP deductible but thought they were buying policies that did not have a PIP deductible. 

In 2010, as a result of negotiations with the Department of Insurance, Progressive added a line to its website, "Your PIP coverage currently includes a deductible.  You may elect a deductible of up to $8,000 or no deductible."  It also changed the website so that the default position for customers with health insurance was a $250 PIP deductible instead of an $8,000 deductible. 

In Estrada v. Progressive Direct Ins. Co., __ F.Supp.3d __, 2014 WL 5323422 (D. Mass.), the United States District Court for the District of Massachusetts dismissed plaintiffs who had purchased Progressive policies by telephone, as allegations with respect to telephone sales practices were not included in the complaint. 

With respect to claims by plaintiffs who purchased Progressive policies online, the court first dismissed counts alleging only violation of Mass. Gen. Laws ch. 176D, as a private right of action for violation of that statute exists only through a 93A claim.  It also dismissed a count alleging violation of Mass. Gen. Laws ch. 175 §181, as that statute does not create a private cause of action for an insured under an automobile policy.

The court denied summary judgment to Progressive on the 93A count.  It held that the evidence taken as a whole was sufficient to establish that the website had the "capacity or tendency to deceive."  The fact that the plaintiffs testified that if they had been told that they could obtain PIP coverage for their household members with no increase in premiums they would have done so was sufficient to establish causation on the 93A claim. 

Progressive argued that the because after review the Department of Insurance and the Massachusetts Attorney General's office allowed the website to remain, its website was affirmatively permitted by the laws of the Commonwealth, creating an exemption from 93A liability.  The court disagreed, because there was no evidence that the DOI or AG's office explicitly approved the manner in which the website defaulted customers to an $8,000 PIP deductible for themselves and their household members.   

Personal Injury Lawyer Launches a Constitutional Challenge Against Bill 15

Joseph Campisi, a Toronto area personal injury has launched a constitutional challenge to Bill 15, Fighting Fraud and Reducing Auto Insurance Rates Act, 2014.  The bill received Royal Assent in November 2014 and introduces a number of changes to the auto insurance system including:

• moving SABS disputes to the Licence Appeal Tribunal
• introduce  regulation to the towing and vehicle storage industries
• authorize the province to reduce vehicle storage costs.

However the likely the trigger for the action is the provision in the bill that takes away the right of accident victims to take disputes regarding accident benefits to the courts instead of arbitration.  This provision was opposed by both plaintiff and defense lawyers, accident victims and health professional groups. Below is post on Joseph Campisi's blog regarding his action.

Joseph Campisi, lawyer and advocate, is launching a constitutional challenge in the Ontario Superior Courts.  Mr. Campisi is seeking a declaration from the courts that parts of the legislation that were recently passed by the Liberal Government are discriminatory and unconstitutional and should be inoperative.

“The right to access the Superior Courts is a fundamental right for Canadians.  I am concerned that the recently proclaimed legislation will deny this right to individuals who have been severely disabled.” said applicant and noted Personal Injury Lawyer Joseph Campisi.  “Historically, the deck has been stacked against collision victims.  The recent amendments to the legislation have turned a bad situation into a worse one for these vulnerable individuals.  No longer will these individuals be allowed to have the assurance of impartiality and independence that is a cornerstone of our justice system when litigating a claim against their own insurance company.  I could not stand idly by and let this happen.”

In the fall, of 2014, the Ontario Government passed Bill 15 which is titled Fighting Fraud and Reducing Automobile Insurance Rates.  One of the legislative amendments changes how disputes between insurers and insured are settled.  Historically, disputes could be brought before the Superior Courts or before sophisticated arbitrators with expertise in interpreting insurance law.  Bill 15 has changed how disputes are resolved by giving the sole adjudicative power to individuals who will be appointed at the whim of the Liberal Government.  These are the same decision makers who have jurisdiction on matters ranging from film classification to upholstered and stuffed articles. Unlike historical appointments, individuals without any specialization or guaranteed independence or impartiality will be ruling on disputes that can run into the millions of dollars and will determine the quality of life that an automobile victim will face going forward.

“This application will challenge Bill 15 on the basis that it violates disabled persons’ Chapter s.15(1) right to be free from discrimination.  Bill 15 is also being challenged based on s.96 of the Constitution which relates to the public’s right to have access to the courts.  The way in which Bill 15 is drafted opens the door to political interference.  The government of the day can choose who will hear any dispute and if the government does not agree with the arbitrator’s decisions, the government can get rid of the adjudicator the next day.  When it comes to lobbying the government there is little doubt as to who has the deeper pockets- automobile insurers or accident victims.  Introducing such laws is undemocratic and detracts from the rule of law.  This legal challenge will fight for disabled individuals’ right to fair treatment and the public’s right to access the impartial court system.”

Ontario Auto Insurance Rates Fall by 1.44% in 2014

This past week FSCO released rate filings approved for fourth quarter of 2014. Sixteen insurers, representing 46.81% of the market based on premium volume, had rates approved in the fourth quarter of 2014. Approved rates decreased on average by 0.54% when applied across the total market.  The total annual approved rate decreased on average  1.44% in 2014.

 In the backdrop is the Ontario government's commitment to reduce rates in the province by 15% before August 15, 2015. The chart below breaks down the quarterly rate approval changes following the announcement of the rate reduction strategy in 2013. The third quarter of 2013 has been included although many of the rate approvals for that quarter may have been filed well before the strategy was announced.

Quarter	Rate Change
2013-3Q	-0.68%
2013-4Q	-3.98%
2014-1Q	-1.01%
2014-2Q	+0.22%
2014-3Q	-0.11%
2014-4Q	-0.54%
Total 2014	-1.44%
Total Since Aug 2013	-6.10%

The accumulative rate reductions approved by FSCO during this period have been  6.1%. With just 7 months remaining, the government is considerably short of its target and requires further reductions of about 9%.  Likely not achievable in the remaining time despite the recent passage of Bill 15 and a number of regulatory changes.  The government will not achieve sufficient savings from reduced interest payments and the licensing of service providers to bring down rates another 9%.  If the creation of a new dispute resolution system at the Licence Appeal Tribunal has an impact on costs, it will not happen in 2015.  

However, the government has not abandoned their rate reduction strategy.  That might mean additional reforms may be on the way and that the timeframe for achieving the target will need to be extended.  The report on FSCO's Three Year Review has not been released The review was initiated in 2014 and one must assume it was been completed by now.  It is possible that the review could evolve into another set of reforms as was the case in 2009. The government is also committed to a minor injury treatment protocol, towing regulations and changes to the definition of catastrophic impairment.  

We shall see what transpires in the months ahead.

1st Circuit holds insurer did not discriminate by not basing sober house premiums on three-family house premiums

PSI operates two sober houses for individuals suffering from substance abuse.  Each house has three floors and capacity for 30 residents.  Prior to the buildings becoming sober houses they were three-family rental properties. 


PSI sought insurance from Nautilus Insurance. Nautilus based the premiums on the category of "Halfway Houses -- Other Than Not-For-Profit."  Just as with shelters, rooming houses, transitional housing for the formerly homeless, student housing, etc., premiums were calculated according to the number of beds at the property.


PSI  sued Nautilus, alleging that its calculation of premiums violated the Fair Housing Act.  It alleged that Nautilus should have provided PSI with insurance rates applicable to three-family houses.


The FHA makes it unlawful to discriminate in the sale or rental of a dwelling because of a handicap, including substance abuse. 


In PSI, LLC v. Nautilus Ins. Co., 2014 WL 740 (D.Mass. 2014), the court first held that PSI had standing to bring the FHA suit because it properly alleged it was harmed by Nautilus's allegedly discriminatory rates.


The court held that Nautilus was not liable for discrimination on the basis of disparate treatment of PSI.  Nautilus  had a nondiscriminatory reason for classifying the sober houses as halfway houses rather than three-family dwellings: they were not operating as three-family dwellings and therefore posed a different liability risk.  The sober houses would have more foot traffic and higher turnover of tenants.  The premium determination was not made because of disability of the residents but on the same formula that applied to other types of housing such as boarding houses and rooming houses.


The court held that Nautilus also could not be liable under a disparate impact theory.  PSI alleged that because premium calculations for three-family houses are not based on the number of occupants, Nautilus' occupancy-based premium calculation for sober houses was facially discriminatory and disadvantageous to the disabled.  The court held that there was no evidence that the challenged practice caused a discriminatory effect, and that Nautilus had provided a legitimate, nondiscriminatory reason for its rates. 


The court held that the request for lower premiums was not a reasonable accommodation and was  unnecessary to allow the residents to enjoy the housing in question where there was no evidence that cost-savings would be passed on to residents. 


Finally, the court held that PSI's allegation that Nautilus violated the Americans with Disabilities Act must fail for the same reasons as the FHA claims must fail. 

Negligent drivers liable to rescuers for injuries that are reasonably foreseeable

A recent summary judgment motion dealt with the extent of the duty of care owed to rescuers.

In Maguire v Padt, 2014 ONSC 6099 (S.C.J.), the defendant, Suzanne Padt, was driving in whiteout conditions when she lost control of her car and rolled into a ditch. Several passing motorists pulled over to rescue Padt from her car. After placing Padt safely in a police cruiser, the rescuers were preparing to return to their vehicles when another passing car lost control and drove into them. Two of the rescuers were killed and a third was seriously injured.  They commenced an action against Padt.

Padt brought a motion for summary judgment, arguing that the duty of care that she owed to her rescuers concluded at the end of the rescue and that the rescue had concluded when she was removed from imminent peril and was safe in the police car.

In its decision, the court first reviewed and affirmed the established legal principle that negligent parties who cause themselves or others to be placed in danger owe a duty of care to the responding rescuers.

The court stated that the rationale underlying this duty was that injury to rescuers was a reasonably foreseeable consequence of the negligent conduct that led to their involvement. The court stated that the negligent party should be liable for any injury that was a reasonably foreseeable consequence of the negligent conduct – not just for injuries that occurred while the person being rescued was in peril. The court put it this way: “It is foreseeability, not the end of the peril, that sets the limits of the liability.”

Given the whiteout conditions on the road, the court found that the second accident was a reasonably foreseeable consequence of Padt’s negligent conduct. The court dismissed Padt’s motion and, under the assumption that Padt was negligent in causing the first accident (which was accepted for the purpose of the motion), granted partial summary judgment in favour of the plaintiffs.

Insurance News - Monday, January 12, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, January 12, 2015:

• As the number of car fatalities falls Americans are now more likely to die from getting shot than in car accidents.
• This is incredible.  With all the articles and warnings about distracted driving, a website operated by the Toronto Star is suggesting that drivers exercise in their car while stopped at red lights.
• Is it a good idea to lower the cost of auto insurance and risk under-insuring yourself?
• China’s transport ministry has banned taxi hailing apps such as Uber from using cars and drivers without taxi licences in a bid to regulate the rapidly growing sector.
• Driverless car technology will rollout gradually. The first driverless cars will likely allow the car to self-drive in stop-and-go highway traffic, but when traffic clears the driver takes the wheel again.

Insurance News - Saturday, January 10, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, January 10, 2015:

• A British insurer may be the first in the industry to offer driving lessons for drivers’ weaknesses based on telematics data.
• Florida auto insurance anti-fraud reforms that become effective on January 1, 2013 has created a drop in the number of personal-injury protection claims filed and dollars sought.
• GM and OnStar will be partnering with a U.S. insurer allowing new car owners to opt into a service that will track driving habits during a 90 day span.
• Google may be moving into the U.S. auto insurance market with a shopping site for people to compare and buy policies, as it continues to shift its attention to the automotive industry.
• A Towers Watson study suggests that claim supervisors spend too little time reviewing files of direct reports which is impacting on profitability.

Insurance News - Thursday, January 8, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, January 8, 2015:

• Will Google cars eviscerate the personal injury bar?
• With an aging population and reduced driving, what will happen to the industry if auto claims keep dropping?
• California to offer low-cost car insurance (under $450) and drivers licences to illegal immigrant drivers to reduce the number driving uninsured.
• The private company hired by the province to conduct all driving exams was failing to properly road test tractor-trailer drivers.
• Ridesharing and Car Insurance: A little white lie?
• It’s not just drunk and distracted drivers that are dangerous but drowsy drivers as well.

Municipality Has No Duty to Negligent Drivers

The Court of Appeal recently held that there is no duty on the part of a municipality to keep its roads safe for those who drive negligently.  It also rejected an argument that there is a different standard for rural and urban drivers.

In Fordham v. Dutton-Dunwich, 2014 ONCA 891 (C.A.), the 16-year-old plaintiff was seriously injured when he came to a rural intersection, ignored a stop sign and drove through the intersection at 80 km/hr.  He lost control on a curve and crashed into a concrete bridge abutting the road.  The trial judge found the municipality 50% responsible for failing to post a checkboard sign warning of the change in the road's alignment.  She held that it was local practice for rural drivers to go through stop signs and the municipality should have known that ordinary rural drivers do not always stop at stop signs.

The Court of Appeal allowed the appeal and dismissed the action.  Laskin J.A. held that a municipality's duty of repair is limited to ensuring its roads can be driven safely by ordinary drivers exercising reasonable care.  In addition, there cannot be one standard of reasonable driving for rural drivers and another for city drivers.  There is one standard of reasonable driving and that standard requires drivers to obey traffic signs.

Fordham helps define a municipality's standard of care: although ordinary reasonable drivers are not perfect and may make mistakes, they are not negligent.

OWCP and reports from someone who is not considered a physician

In a federal workers compensation case, reports must be from a physician. A physician includes  a podiatrist for a foot condition, a psychologist who has a Ph.D., and a chiropractor ONLY for the condition of subluxation. The Employees Compensation Appeals Board has held that a report from a non-physician will be considered medical evidence if countersigned by a qualified physician. This is also found in the Procedure Manual, at Chapter 2.805.3a(1) (January 2013).