Adjusting to SABS: Injuries, Assessments and Settlement Plans

As a result of Ontario’s new Statutory Accident Benefits Schedule (SABS), which came into effect last September, adjusters now need to develop a broader understanding of serious injuries and how the various facets of injury, assessment, treatment options and coverage fit together. While the new legislation directly affects adjusters in Ontario, the knowledge and skills involved are valuable for adjusters across the country.

Determining benefit entitlement requires integrating medical information with other actuarial information to establish an appropriate course of action for future rehabilitation. Adjusters need to:

• differentiate between acute and chronic injuries, and between objective and subjective injuries
• assess the impact of the injuries on the whole person
• review the life care plan for returning the person to maximum independence
• understand how structured settlements can be tailored to a claimant’s needs

Acute vs. chronic injuries

Acute injuries are of limited duration (typically no more than six months) and result from a specific impact or trauma to the body. The most common types are soft tissue injuries such as sprains and strains of the muscles and/or ligaments of the neck, back, shoulder, knee, etc. More severe acute injuries can also include nerve damage and fractures. For acute injuries, pain resolution occurs when the underlying cause of the pain has been treated and healed.

Chronic injuries typically involve pain lasting more than six months, and there is often no obvious cause for the pain. Pain normally serves as an alarm to warn us about harm to the body; in chronic pain, the alarm goes awry, remaining on all the time and at a disproportionate volume. A person who feels constantly constrained by pain may experience a reduction in mobility, and perhaps also depression or sleep disturbances. Chronic pain can involve a mix of physiological, psychological and sociological components. The challenge is to assess the relative contribution of each component and address each in the history and assessment of the patient.

Objective vs. subjective injuries

Objective injuries can be verified using a diagnostic method other than the person’s verbal description; for example, an x-ray, an ultrasound or an MRI. The choice of an appropriate course of treatment is linked to the severity and type of injury as confirmed through diagnostic testing.

Subjective injuries are those that are difficult to verify through diagnostic testing, such as muscle or tendon strains and sprains. When a person provides a subjective description – for example, “my neck is stiff and sore” – healthcare professionals use standardized tests (range of motion, reflex tests, etc.) and best-practice guidelines to try to verify the subjective findings and determine an appropriate course of treatment. Subjective injuries cannot always be measured and may require a great deal of investigation.

Assessing the whole person

Assessing benefit entitlement also involves looking beyond the specific nature of the injury to its implications in the broader context of the claimant’s life. For example:

• Who is the claimant? What is his or her education level, family situation, social activity pattern?
• What does the person do for a living? Are they legitimately off work? What are their mental and physical requirements? Can the person be retrained?
• Is recovery progressing as expected? Are there complications? Has there been another event?
• Does the claimant have a prior history of worker’s compensation or injury claims?
• How do any pre-existing conditions affect recovery and how will they affect quantum?
• Based on the medical reports, when should full recovery and final prognosis be expected?

Life care plans

A life care plan is a comprehensive, detailed plan that identifies the current and future medical and non-medical needs of a seriously injured person, then quantifies the costs related to these needs over the injured person’s expected lifespan. It is based on the client’s individual needs and is specific to that client. The emphasis is on assisting the person in achieving maximum independence, preventing functional deterioration and providing replacement services for those tasks the injured person is no longer able to complete.

Future care cost reports and life care plans are similar but not exactly the same. Life care plans focus on catastrophic and permanent injuries which the claimant will not recover from, while future care cost reports may involve serious but less-catastrophic injuries and treatment over a prescribed time period.
A life care plan is usually completed by a registered nurse, occupational therapist, vocational consultant or rehabilitation management firm.

Structured settlements

A structured settlement is a financial package designed to meet a particular claimant’s needs through periodic payments, either for a fixed term or for the claimant’s life. The structure is tailored to the claimant in question. All payments are tax-free, and there is often an initial lump sum to meet current needs.

The funding vehicle for the structure is generally an annuity purchased from a life insurer. This vehicle has been developed over a number of years, and the design of structures has become quite sophisticated. For example, annuities can be indexed at a given rate to compensate for inflation and can also be designed to provide lump-sum payments at intervals for specific needs, such as replacement of wheelchairs.

Structures are almost always designed to include a guarantee period; for example, “lifetime payments guaranteed 25 years.” The guarantee means the payments must continue to the end of the 25-year guarantee period, even if the person dies within 25 years of the start date. In that case, the remaining guaranteed payments would be paid to the person’s estate. If the person lives beyond 25 years, the payments will continue for as long as he or she lives.

Adjusters need to be able to explain to claimants the reasoning behind proposed settlement plans. This, in turn, requires understanding not just the plan itself, but the injuries, their impact on the whole person and the person’s life care plan.

This article is based on excerpts from the study material in the Understanding Serious Injury series of workshops – a new supplementary training program launching later this year, developed specifically for adjusters by the Insurance Institute of Ontario and the Ontario Insurance Adjusters Association.