Counting Catastrophic Costs: The Life Care Plan

Court-awarded damages in catastrophic injury claims have been on the increase lately, in a few cases reaching as high as $20 million. Future care costs represent the largest component of these damage awards. As costs rise, claims professionals will need to be particularly careful in their approach to catastrophic injury claims.

Handling catastrophic injury claims can involve a delicate balancing act for insurers and adjusters. The goal is to ensure that claimants receive the treatment, care and compensation they are entitled to. But insurers and adjusters also have to recognize the trend of rising personal injury damage awards and an increasing sophistication on the part of plaintiff lawyers when it comes to future care costs.

One of the main tools used to calculate accurate future care costs and quality of life for the catastrophically injured claimant is the life care plan. The plan has become increasingly prominent in tort cases involving serious bodily injury claims within the last ten years, where it is often used to assist plaintiff or defence lawyers in identifying the total costs of future care.

Customized, comprehensive plan

A life care plan is a comprehensive, detailed plan that identifies the current and future medical and non-medical needs of an injured or disabled person and estimates the costs of meeting these needs over the injured person’s expected lifespan. The emphasis in the plan is on helping the person to achieve maximum independence, providing replacement services for tasks the person is no longer able to complete, and preventing functional deterioration.

The plan is customized to the individual’s situation and can cover a wide range of needs and supports, such as

• home care and/or facility care
• diagnostic testing
• projected therapeutic treatments
• medication
• medical supplies and equipment
• medical services and future medical care
• wheelchairs and other mobile assistance devices
• orthopedic equipment
• orthotics and prosthetics
• aids for independent functioning
• home furnishings and accessories
• architectural home modifications
• transportation
• non-medical support services
• vocational and/or educational plans
• leisure or recreational equipment and programs
• counselling or support groups

Expenses on the increase

Several factors are contributing to higher expenses flowing from life care plans in catastrophic injury claims, including inflation-based increases, increases in the market value of health care services and equipment, and an increase in the use of private clinics and agencies for treatment instead of government health care facilities and services.

Another factor is the trend to take a more expansive view of quality-of-life issues for the catastrophically injured claimant, as opposed to focusing strictly on medical treatment and care.

The two most contentious areas of life care plans seem to be attendant care and transportation, both of which can make significant contributions to total costs. Modification to housing is another increasingly costly issue.

Planning professionals

Life care plans are usually completed by registered nurses, occupational therapists, vocational consultants or rehabilitation management firms.

Recently, courts have recognized the Certified Life Care Planning (CLCP) designation, which started in the U.S. but has expanded into Canada (the Canadian designation is CCLCP).

Cost control

No matter who completes the plan, the life care planner’s first duty is to create an appropriate plan for the injured person. But planners also need to be aware of cost constraints and look for ways to address cost issues without sacrificing the quality of the plan.

Adjusters and insurers can help by working closely with the planner: providing the planner with all the available medical documentation, enabling correspondence with all treating practitioners, allowing enough lead time for report completion and permitting the planner to meet with the client.

Adjusters and insurers may find that preparation of an appropriate life care plan requires a certain amount of time and expense. If the planner simply spends a couple of hours with the claimant and then writes a report, the plan may not be adequate for the claimant or the insurer.

Adjusting appropriately

Adjusters can respond appropriately to a catastrophic injury claim by requesting a comprehensive life care plan by a qualified professional, either at the outset or in defence. It’s worth taking the time and trouble to get the right plan conducted by the right planner. The experience of the claims professional involved is thus another critical element in managing these claims. The ability to appropriately assess the file, engage the right experts and manage the settlement process (with or without litigation) plays a major role in the outcome.

This article is based on excerpts from ADVANTAGE Monthly, a series of topical papers on emerging trends and issues provided to members of the CIP Society. The Chartered Insurance Professionals’ (CIP) Society is the professional organization representing more than 15,000 graduates of the Insurance Institute’s Fellow Chartered Insurance Professional (FCIP) and Chartered Insurance Professional (CIP) programs.