Insurance News - Monday, May 30, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, May 30, 2016:

• Auto insurance is a sore spot for many Canadians. Many believe they are paying too much for premiums while receiving too little in return. Although customer satisfaction is improving.
• It's almost June 1 and mandatory accident benefit coverage in Ontario will be shrinking.
• Speakers at the U.S. National Highway Traffic Safety Administration's first forum on the topic offered mixed opinions about whether the arrival of self-driving cars should be slowed or sped up.
• GM and Lyft will be using Chevy Bolts as autonomous taxis in selected U.S. cities in 2017.
• An Ontario woman blindly followed her car's GPS straight into Lake Huron. Self-driving cars got to be better than this.
• The owner of a Tesla Model S says that his semi-autonomous car crashed into the back of a trailer while he thought it was parked. Tesla Motors isn't so sure that's what happened.

LAT Have Mercy

On April, 1, 2016, Ontario's Licence Appeal Tribunal's (LAT) Automobile Accident Benefits Service (AABS) was officially open for business. After 26 years, the Financial Services Commission of Ontario (FSCO)'s Dispute Resolution Group stopped accepted new applications. The transfer of responsibility has created considerable apprehension among its users. FSCO was flooded with new applications in the weeks leading up to April 1st. For many, it's a matter of 'better the devil you know.' What will this change mean for stakeholders? Will it really be different?

How did we get here?

The establishment of the AABS at LAT brings to a conclusion a process that began with the appointment of the Honourable J. Douglas Cunningham in August, 2013. Justice Cunningham was asked to review the auto insurance dispute resolution system. He was asked to make recommendations to the government to address a significant backlog, in disputed autoinsurance claims pending mediation and arbitration, that existed at the time - and to propose system improvements. His report - delivered in February 2014 - included 28 recommendations. As a result, Bill 15, the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014 included a provision transferring responsibility for resolving disputes over statutory accident benefits from FSCO to LAT. Regulation changes filed by the government on March 7, 2016 - which came into effect on April 1 - was the final step in implementing the new dispute resolution system.

What are the changes?

• The only dispute resolution process available to parties is an arbitration through LAT.
• Mandatory mediation is no longer part of the dispute resolution process.
• No court action can be commenced for statutory accident benefits disputes, even where there is a companion tort action.
• There is no right of appeal, other than a reconsideration option with the Executive Chair of the Safety, Licensing Appeals and Standards Tribunals of Ontario (SLATSTO) for exceptional circumstances and the Divisional Court on a question of law.
• A total of 22 new full-time and part-time LAT adjudicators have been appointed to date. Auto insurance stakeholders will be interacting with a largely unknown group of adjudicators as only three have had experience resolving disputes at FSCO.
• LAT is committed to resolving most (90%) disputes within six months.

What happens to FSCO?

Applications for mediation, neutral evaluation and arbitration have not been accepted since March 31, 2016. A mediation, arbitration, court proceeding, appeal, variation or revocation that was commenced before April 1, 2016 may be continued at FSCO after that date. If a mediation fails before April 1, 2016 , an application for arbitration can only be made to the LAT on or after April 1, 2016. Applications to the Director of Arbitrations - for appeals, variation or revocation - may only be made where the application for arbitration was received by FSCO before April 1, 2016.

How does LAT work?

Since there is no longer mandatory mediation, an applicant will be able to apply for arbitration following the denial or termination of statutory accident benefits. The applicant (an insured or insurer) files an Application for Arbitration with LAT. The other party files a response.

It is intended that all procedural issues, lack of production, or failures to attend insurer examinations are to be dealt with upfront by the Registrar. LAT may dismiss an application without a hearing if (1) the claim is an abuse of process, (2) the matter is outside the Tribunal's jurisdiction, (3) the statutory requirements for bringing the application have not been met, or (4) the party filing the application has abandoned the process. This is a significant departure from the FSCO process which included preliminary hearings. However, if LAT is reluctant to dismiss these applications, then the gatekeeper function, envisioned by Justice Cunningham, will not be put into practice.

The first step in the arbitration process is a case conference. This is the settlement meeting described in Justice Cunningham's report. It must take place within 45 days of the date LAT receives an application. The case conference is analogous to a FSCO pre-arbitration meeting except most will take place over the phone instead of in-person. Prior to the case conference, the parties are required to outline the documents to used at a hearing, any production issues, the preference for the type of hearing (written, video/telephone or in-person), a list of witnesses and details of the most recent settlement offer.

Should the dispute not be resolved at a case conference, then a hearing will take place within 60 days. The type of hearing will be decided by the adjudicator at the case conference. Decisions will be issued within 30 days for written hearings, within 45 days for video/telephone hearings and 60-90 days for in-person hearings.

Lingering concerns

There is no LAT appeal process other than the possibility of a reconsideration by the Executive Chair of SLATSTO if there is a clear error that was made by the adjudicator. Appeals based on merit are not available. A party can apply for judicial review where there is a question of law.

Is this a significant departure from the FSCO process?

 The simple answer is yes. But how much different can only be determined over time. The forms and practice rules are simpler. In an attempt to create a different culture, very few FSCO arbitrators have been appointed to LAT. Some see this as a good thing while others are concerned. But it does add an element of uncertainty for an initial period. 

There are other elements of the new process to be concerned about. Justice Cunningham recommended the creation of statutory timelines and sanctions regarding settlement meetings (case conferences), arbitration hearings and the release of arbitration decisions. He felt that there need to be strict adherence to timelines and that creating statutory obligations was the most effective way of accomplishing this. However, no statutory timelines have been created and instead LAT will manage timeline requirements. This is essentially how things existed at FSCO. What will happen if the parties are not ready for a quick hearing? Will adjournments become common occurrences? Stakeholders will be waiting to see if the promised timelines will be met or erode over time.  

In response to criticism of FSCO practices in conducting mediations, Justice Cunningham recommended that settlement meetings (case conferences) be conducted in-person or by video conferencing. He rejected telephone meetings.  LAT will predominantly be conducting case conferences over the phone. Considering that FSCO pre-arbitration meetings are in-person, this is really a step backwards.

Justice Cunningham wanted hearings to follow three streams: paper reviews, expedited in-person hearings and full in-person hearings. He recommended criteria be adopted to determine which stream a case falls under. Those criteria have not been adopted. Instead, the LAT adjudicator will exercise his or her discretion to determine the format of a hearing. At FSCO, similar discretion existed but all hearings were in-person.  Although LAT has suggested that many hearing will be paper reviews, will stakeholders pressure adjudicators to provide more in-person hearings? 

A number of other recommendations by Justice Cunningham seemed to have been abandoned. The settlement of future medical and rehabilitation benefits were to have been prohibited until two years after the date of the accident. The SABS have not been amended and settlements will still be permitted one year after the date of the accident. In addition, every insurer was to establish an internal review process as the first step in the new dispute resolution process. It does not appear that all companies have established an internal review process.

Conclusion

A lot of time and effort has gone into creating the AABS at LAT to replace the dispute resolution process at FSCO. One of the problems identified by Justice Cunningham has been the culture surrounding the previous system.  LAT has made a considerable effort to create a new culture. However, the new adjudicators will be dealing with the same clientele and will need to interpret the same complex and frustrating statutory accident benefits. It will take some time to determine how much different the new system is.

What does it mean that OWCP sent me a letter from a Quality Assurance Specialist ("QAS")?

When you are receiving FECA benefits you are going to be regularly scrutinized. Your employing agency may do surveillance and OWCP will also periodically require all sorts of information from you. I was recently shown a letter signed by the district director of an OWCP office asking the claimant to contact an individual who was identified as a Quality Assurance Specialist (QAS). The person identified on the letter as the QAS is actually a criminal investigator from the USDOL. Its not clear whether the target here is the claimant or the claimant's physician. Or perhaps this is just the usual routine over the top OWCP bullying techniques.

When OWCP sends you a letter telling you to do something, if there is an explicity threat that if you don't cooperate your benefits will be sanctioned, then you cannot ignore the letter. However, if the letter does not give you notice that there is a penalty for not responding, then you may want to consider whether or not you respond. The fact that this letter was signed by the district director, provided the name of an OWCP claims supervisor and a direct dial number for him (OWCP employees typically make it impossible to find their direct dial info), and lastly the person identified benignly as a "QAS" is in reality a criminal investigator, makes me concerned that this person may have a serious problem. This person should perhaps have a lawyer contact the QAS on their behalf to find out what is going on and act as an intermediary.

Mass. Appeals Court finds title attorney liable to title insurance company

Stewart Title Guaranty Company, a title insurer, retained Attorney Robert Kelley to issue title insurance policies to owners and lenders in connection with real estate transactions.

Stewart sued Kelley for negligence and sought indemnity with respect to several  closings.  In Stewart Title Guaranty Co. v. Kelley, 89 Mass. App. Ct. 1121, 2016 WL 1741537 (unpublished), the Massachusetts Appeals Court held that Kelley was liable for breaching the standard of care at least with respect to two of those closings. 

In the first, Kelley issued a title insurance policy even though the property was encumbered by a prior mortgage and two attachments that were recorded in the Plymouth Country Registry of Deeds.  Kelley's defense was that he hired a reputable title examiner for the title review.  The court adopted Stewart's argument that "while a shortcoming in the performance of the examiner may create rights of Kelley against the examiner, the examiner's good reputation is not a defense to an action for negligence by Stewart against Kelley." 

(That discussion illustrates the fact that indemnity clauses in contracts by which title insurers retain attorneys to issue title policies have the effect of transferring risk from the title policy to the attorney's malpractice policy.) 

The court also held that expert testimony was not required on the issues of negligence, because the claimed legal malpractice was so gross or obvious that laypeople could rely on their common knowledge or experience to recognize it from the facts.

In another closing, Kelley mailed sufficient funds to close out a previous line of credit with Citizens Bank so that a different mortgage would be the senior mortgage on the property.  His file did not contain a standard letter instructing the lender to close the line of credit.   Citizens did not close out the line of credit and the borrower thereafter withdrew additional funds, resulting in a loss to Stewart. 

The court held that Kelley's failure to send the letter or to keep a copy of it deprived Stewart of the material it needed to establish that the credit line was  closed and thereby to extinguish the Citizens claim. The court again held that no expert testimony was necessary to prove negligence in that instance.

 

Insurance News - Monday, May 16, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, May 16, 2016:

• Uber, Google and Ford form self-driving car coalition to urge government action on self-driving car tech.
• Regulatory change demands insurers show regulators using telematics data for claims management would help consumers.
• There is a lot of speculation around what the world will look like when there are self-driving cars on the road. For example, one in four drivers (the person behind the wheel) are expected to sleep while in self-driving car.
• An expert from the Canadian Automated Vehicles Centre of Excellence warns that there will be a lot of sex behind the wheel.
• Then there is the NATO security expert who warns that Islamic State technicians are working to produce driverless car bombs.

Insurance News - Saturday, May 14, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, May 14, 2016:

• Is an outdated loyalty system the only thing keeping brokers from oblivion?
• Canadians can now rent their personal vehicle to others through a U.S. company that has just launched in this country. It's like AirBnB for car owners. But should you do it?
• A new ride-hailing app made exclusively for women will now launch in the U.S. nationwide this fall after being met with overwhelming demand from users.
• Auto insurance rates in Ontario have dropped about 10 per cent on average in the past few years, putting the Liberal government two-thirds of the way to a goal that passed eight months ago.
• Who's responsible when a self-driving car crashes? In short term it will be drivers but in long term it will likely be manufacturers.
• Classifying the different levels of vehicle autonomy. Most cars will not be at the top level for many years.