Cat Scan

What has taken so long? It is a fair question of the seemingly unending process to redefine catastrophic impairment and impart greater certainty to the question of who is and who is not catastrophically injured for insurance purposes.

While the category of “catastrophic impairment” was first introduced in Ontario in 1996, the provincial government pledged in November 2009 to examine the wording as part of its auto insurance reform package. An expert panel was appointed in December 2010 to do so. The panel presented its conclusions to the Financial Services Commission of Ontario (FSCO) in two reports in April and June of 2011, and the regulator also received 33 stakeholder submissions in response to the panel’s recommendations.

In June 2012, Ontario’s Superintendent of Financial Services issued its report to the provincial finance minister on the definition of catastrophic impairment, which largely accepted the expert panel’s recommendations (with some modifications). FSCO also held a roundtable discussion in March 2013 to garner yet more “stakeholder feedback,” notes a spokesperson for the regulator.

Three and a half years later after the process first began, insurers are still waiting for a firm policy decision to change the definition of catastrophic impairment in the Statutory Accident Benefits Schedule (SABS).

“The government has not indicated a timeline, but it is important that it act soon,” says Ralph Palumbo, vice president, Ontario for Insurance Bureau of Canada (IBC). “Because of the porousness of the definition, insurers have reported that the number of applications for catastrophic designation has been climbing.” 

OPEN TO DEBATE

Clearly, reconfiguring the definition of catastrophic impairment is a complicated process fraught with issues of evidence-based medicine, legal interpretations and an array of interest groups with, in some cases, diametrically opposed viewpoints. Regulators are walking a fine line between providing appropriate funding for catastrophically injured claimants and ensuring affordability in auto insurance – a hot topic of late.

In fact, exactly how much catastrophic injuries contribute to the costs of auto insurance is a subject open to some debate. Several commentators suggest that these injuries represent only a small portion of overall accident benefits claims and, thus, do not require a major revamping of the current definition.

“I question fundamentally whether any change in the present (definition) is even necessary as the definition only affects about 1% of all claimants,” says Dr. Harold Becker, an assistant professor in the faculty of medicine at the University of Toronto, and a vocal critic of the expert panel.

“Given that there are 60,000 claimants in the system each year, that means only 600 or so individuals are affected by the definition and… about half of them will clearly meet any reasonable definition due to such things as severe brain injury, quadriplegia and amputations,” Dr. Becker says. “That leaves only a few hundred claimants over whom this whole fight is evolving.”

Others share these sentiments. “Do we really need to devote the time and resources to tinkering with the Cat definition when there is no evidence it is too costly or causing problems in its current shape?” asks Andrew Murray, president of the Ontario Trial Lawyers Association (OTLA).

“(We) believe that these proposed changes are an economic policy issue with the intent of saving dollars for insurers,” says Rhona DesRoches, board chair of the group, FAIR Association of Victims For Accident Insurance Reform. “Catastrophic impairment affects such a small percentage of accident victims; those who need the most assistance,” DesRoches adds.

Even some in the insurance industry are unsure of why catastrophic impairment has consumed so much attention in recent years.

“This has taken up a lot of resources and time for a definition that affects only a small percentage of claimants,” notes Tammie Norn, CEO of Proformance Group Inc., an adjusting firm. “I think there are so many other areas to look at and try to fix in the auto insurance system,” Norn says.

In the Superintendent’s Report on the Definition of Catastrophic Impairment in the Statutory Accident Benefits Schedule, an effort was made to measure statistics of catastrophic injury claims among insurance companies from 2002 to 2006 (the latest period for reliable data). The report found that Cat injuries had increased from a rate of 5.45 per 1,000 bodily injury claims in 2002 to a rate of 9.7 in 2006. This trend “may be related to the evolving definition arising from decisions by arbitrators and the courts,” notes the report.

For Palumbo, the cost issue has little to do with road safety or more severe injuries from car accidents. The primary driver instead is found in the loosened and increasingly inclusive definition of catastrophic impairment.

“Arbitration and court decisions in recent years have produced a variety of interpretations, blurring the line between catastrophic and non-catastrophic injuries,” says Palumbo, who adds that coverage for medical and rehab expenses, as well as for attendant care, rises to $2 million in catastrophic impairment cases.

“This had led to excessive legal action, delayed resolution of claims for many people and growing costs from inappropriate catastrophic designations,” he argues.

The “blurred” legal interpretation of catastrophic impairment prompted the call for an expert panel to review the definition and a sharper emphasis on updated diagnostic measurements, science and evidence-based medicine.

“The current definition is nearly two decades old and is no longer based on the leading available science,” Palumbo says. “The expert panel has outlined what that leading science is and how it can be used to bring certainty to the determination of whether an injury is catastrophic.”

The superintendent’s report similarly supported the expert panel’s focus on evidence-based medicine. “The panel is of the opinion that the current system leads to inconsistent catastrophic impairment determinations and frequently gets the diagnosis wrong,” the report states. “The proposed changes would make the process more accurate, consistent and objective, and would also speed up determinations and reduce transaction costs and disputes,” it adds.

“The panel’s approach of incorporating current evidence-based medicine is consistent with the approach the government has directed for another project, namely the development of a medical evidence-based treatment protocol, the Minor Injury Guideline (MIG),” the report notes.

While the expert panel report contained multiple recommendations – including automatic designation of catastrophic impairment for children suffering serious brain injuries – it called for changes to the definition of catastrophic impairment in four key areas: the combination of physical and mental/psychiatric impairments; the introduction of new clinical tools; a revisiting of pain as a category of impairment; and an interim benefits period for people who are seriously injured and awaiting determination of catastrophic impairment status.

COMBINED OR NOT?

The first, and arguably most controversial, recommendation of the expert panel is to not combine physical and psychological impairments in determining a whole person impairment (WPI) rating. This was supported by the superintendent in his report.

“The impairment rating systems for physical and mental/behavioural impairment are not compatible and cannot be combined. In addition, there is no scientific evidence to suggest that combining impairments is a simple additive process,” the superintendent notes.

“The (expert) panel had trouble understanding how combinations of physical and psychiatric conditions that independently do not meet the criteria for catastrophic impairment could be equated to a severe injury to the brain or spinal cord or to blindness,” the report adds.

How
ever, others note that Ontario’s highest appeal court has upheld the combination of mental and physical impairments in catastrophic injury cases.

In a unanimous December 2011 ruling, Kusnierz v. Economical Mutual Insurance Company, the Court of Appeal for Ontario found that assessors could combine physical and psychological impairments to determine catastrophic impairments. That decision restored the rules for determining catastrophic impairment established in Desbiens v. Mordini in 2004.

“(We) emphasize the need to continue with the combining of mental and physical impairments in light of the Kusnierz decision and notions of equality and fairness in addressing claimants who suffer from both physical and mental or psychological impairments,” says the OTLA’s Andrew Murray. “It is unwise to discard more than 15 years of jurisprudence, unless there is some compelling reason to do so,” he cautions.

In fact, Dr. Becker argues the singular focus of the superintendent’s report and the expert panel on medical science has obscured the fact that catastrophic impairment is a legal interpretation.

“It is important to remember that catastrophic impairment is a legal definition, not a medical one,” he says. “Therefore, what does or does not represent catastrophic impairment cannot be based on ‘science,’ nor can it be based on medical opinion. That is the essence of the discussion at hand.”

While the recommendation to not combine physical and psychiatric impairments could impart “clarity” for adjusters, Norn comments she is uncertain if the definition change would stand up to any court test.

“I think it depends whether the courts look at this as a statutory definition or merely a guideline,” she says, noting that a recent decision by a FSCO arbitrator on the MIG ruled it was a guideline only and subject to interpretation.

“If you asked me before (the MIG arbitration decision), I would have said a new catastrophic definition would hold up,” Norn observes. “Now, I am not so sure.”

REFINED CLINICAL TOOLS

A second crucial part of the expert panel’s recommendations involves new clinical tools to determine catastrophic impairment in brain injuries, spinal cord injuries and psychiatric disorders. These refine or replace older measurements. For example, the Extended Glasgow Coma Scale is widely recognized as a superior tool for determining traumatic brain injury in adults over the previous Glasgow Coma Scale. In addition, the American Spinal Injury Association’s (ASIA) classification for spinal cord injury is recommended as the latest evidence-based clinical tool.

For other types of injuries, the expert panel recommends the definition of catastrophic impairment include a physical impairment or combination of physical impairments that, in accordance with the American Medical Association’s (AMA) Guides to the Evaluation of Permanent Impairment, 4th Edition, 1993, results in 55% or more impairment of the whole person.

In terms of psychiatric disorders, the expert panel suggested a combination of requirements to meet the test for psychiatric catastrophic impairment. It indicated three psychiatric diagnoses should be used as criteria – major depressive disorder, post-traumatic stress disorder or psychiatric disorder.

Another requirement involves a tool called Global Assessment of Function (GAF), which is a numerical scale-scoring system used by mental health clinicians and physicians to rate subjectively the social, occupational and psychological functioning of adults. The expert panel set the GAF score at 40, which was accepted by the superintendent.

Dr. Becker has argued the diagnostic restrictions for mental and behavioural impairment are too restrictive and may actually be discriminatory against Ontarians receiving accident benefits on the basis of a mental disability, potentially violating the Canadian Charter of Rights and Freedoms. He also asserts that the GAF score of 40 or less is “draconian.”

“To me, the introduction of this new draconian definition is an unfortunate agenda-driven attempt to exclude mental illness in all but the most profoundly severe forms,” Dr. Becker contends. “If that is what the government wants to do, it should be straightforward and it should explain its intention honestly as a matter of policy to… Ontarians who may be at risk. So far, this has not been done.”

Another contentious area of the expert panel findings is the decision to not allow pain to be quantified as a separate impairment, which was also accepted in the superintendent’s report.

The superintendent explains the justification for excluding pain as a separate impairment. “In terms of pain conditions, such as chronic pain syndrome and fibromyalgia, the (expert) panel reports that they cannot be quantified as impairments on their own,” his report states. “The (expert) panel indicates there is no way to measure pain and no method of confirming that a claimant does or does not meet a pain threshold.”

Groups such as FAIR strongly disagree with this assessment. “Insurers would likely be delighted to ignore pain and its associated costs,” DesRoches charges.

“Pain is a major part of an injured person’s ability to function in society – take the pain out of the equation and there will be fewer claims. We find the concept absurd and feel that the intent is to save money for insurers. We note that the recommended changes are basically roadblocks to access the promised benefits,” she contends.

IN THE MIDDLE

The final major recommendation from the expert panel is for an interim period of access to accident benefits for people seriously injured, but not determined to be catastrophically impaired at that specific time.

The superintendent agreed with this recommendation, and indicated that additional benefits of $50,000 over and above the standard coverage should be available for these claimants. They would then be assessed at a later date, suggested at six months, to determine catastrophic impairment.

“The (expert) panel believes that fairness would be improved for these claimants if they receive benefits without undue delay,” the superintendent’s report notes.

“(Most) claimants eligible for interim benefits would ultimately receive a catastrophic impairment designation. In most cases, the interim benefits would, therefore, turn out to be an advance on the catastrophic impairment benefits. In a very few cases, the claimant would recover and would no longer qualify for catastrophic impairment designation,” the superintendent adds.

Norn suggests that the interim benefits period could serve as a source of confusion for adjusters, insurers and claimants alike.

“This is definitely going to be a challenge,” she observes. “There are lots of questions about how we are going to handle that, from a claims perspective. That is a very short period of time and we will have to determine whether or not the insurance is adequate.”

DesRoches and FAIR hold that the interim benefits are a stopgap measure that will provide little meaningful treatment for seriously injured accident victims. “This initial $50,000, which sounds like a lot of money, does not really go very far if you are seriously injured,” she argues.

“The proposal is that you can apply for more benefits at the six-month mark and that you may get approval for further benefits after an assessment. And this conveniently ignores that there is nothing quick about our insurance system except the denial rate. There could easily be a gap in treatment while claimants are working their way through the mediation system. How does that fit in with the expectation of timely and appropriate treatment?” she asks.

In fact, groups such as FAIR, OTLA and several medical professionals with expertise in catastrophic impairment have jointly argued the expert panel on catastrophic impairment – and the resulting superintendent’s report, represent a “deeply flawed” process. They have been critical of the composition of the expert panel, its consensus model involv
ing six out of eight votes (which they argue marginalized some members’ input) and its generally more restrictive nature of catastrophic impairment definition. They also contend that the entire review process of a new definition should be overhauled – or scrapped entirely.

This vocal dissent may have prompted the recent roundtable talks at FSCO in March 2013, which many opponents of the expert panel hope will spark a new approach to catastrophic impairment.

“These roundtable discussions represent a fresh start to allow all stakeholders to discuss their views about the Cat impairment definition,” Murray suggests. “We anticipate many conversations and much further study. We doubt anyone would be recommending change without first heeding our cautions as change for the sake of change alone does everyone a disservice,” he adds.

“The feeling that FAIR came away with (from the roundtable) was that the Minister of Finance is fully aware through prior discussions, and the submissions from various stakeholders, that much of the content of this (superintendent) report were unacceptable,” reports DesRoches.

“We hope that our government will acknowledge that the flaws in the panel makeup, the size of the panel and the subsequent lack of real agreement between the members (are) good reasons to reconsider how they have approached this issue,” she says.

On the other side, insurer groups like IBC defend the work of the expert panel as reasonable, scientific and measured in coming up with a new definition of catastrophic impairment.

“The proposed definition relies on a science-based evaluation process that uses scientifically proven tests to determine the type and severity of an injury,” says IBC’s Ralph Palumbo. “Generally, it should produce more consistent and timely injury determinations and fewer costly legal disputes.”

In the review process, the government and other parties involved have spent a great deal of time and resources on getting the definition of catastrophic impairment right, particularly in terms of applying the latest medical science. One likely reason why the definition has taken so long is the need for consistency and clarity in the terminology – regulators know that the courts will carefully scrutinize any new definition.

After so much time, the worst-case scenario would be a hasty return to the drawing board if the courts strike down any new definition of catastrophic impairment.

Given that there is a great deal at stake for both consumers, who pay auto insurance premiums, and accident victims, particularly those who are seriously injured and may fall into “grey areas,” this would be a serious setback, IBC argues.

“After nearly 20 years with the current definition of catastrophic impairment, it is time to update it to ensure timely access to Cat benefits for the people who need it, while also protecting the driving public from the significant cost effects of inappropriate designations,” Palumbo concludes.

Others say the ongoing search for a new definition of catastrophic impairment may end up creating even more uncertainty down the road.

“It has taken 18 years to accumulate the existing jurisprudence that is finally providing clarity to the interpretation of the definition as it stands,” says Dr. Becker. “If the purpose of the definition change (as stated by FSCO) is to ‘clarify’ how to apply the SABS, expect another 18 years before we get to the point we are at now in achieving that clarity.”