Canadian Underwriter

Defining Minor Injury

September 30, 2010   by Laura Kupcis

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While the insurance industry is hopeful the new Minor Injury Guideline (MIG) will successfully curb claims costs, there is an underlying current of fear that perceived loopholes in the MIG might thwart its effectiveness.

The MIG includes pre-approved funding for treatment and a tighter definition as to what constitutes a minor injury, leaving little wiggle room for skirting a minor injury diagnosis. But while the MIG might fix some concerns that were readily apparent in the Pre-Approved Framework (PAF), has it simply created problems elsewhere?

The purpose of the MIG is to help reduce insurers’ claims costs. But whether or not this will be the reform’s final outcome is anyone’s guess. In order for the new Ontario auto regulations to be profitable for insurers (or at least allow them to avoid a loss), more than 55 per cent of all accident benefits claims will have to fall within the new MIG guidelines, the Financial Services Commission of Ontario (FSCO) has reportedly told insurance defence lawyers. Given that somewhere between one and 20 per cent of all AB claims fell under the previous PAF, which the MIG has replaced, will insurance companies see reduced claims costs?

When it comes to minor auto injuries, studies show earlier treatment results in a better prognosis for recovery. Despite this, many claimants — sometimes at the request of their health care providers — were bounced out of the PAF, which meant a delay in starting treatment. If a claimant was taken out of the PAF, insurers’ claims costs increased because the claimant had access to more benefits, such as attendant care and housekeeping benefits, in addition to higher limits on medical-rehabilitation payments and assessment costs.

The new MIG is more expansive than the PAF, in the sense that far more injuries are supposed to fall within its definition of “minor.” However, if the injured person has a preexisting medical condition — one that would prevent the achievement of maximal recovery from the minor injury if subject to the $3,500 med rehab limit — they can be bounced out of the MIG.

This exemption aside, costs might still be reduced under the new regulations. For example, a person with a minor injury, bounced out of the MIG, is entitled to up to $50,000 in medical-rehabilitation benefits, but not to optional benefits such as attendant care and housekeeping. In contrast, a person whose injury is not considered to be minor — i.e. a torn tendon — falls outside of the MIG and is therefore entitled to optional benefits (if purchased) and up to $50,000 in medrehab benefits. Those who are bounced from the MIG will receive less money than those claimants to whom the MIG does not apply.

Is the MIG a suitable replacement for the PAF? Is it even a “replacement”? FSCO is cautioning against making such a comparison. The regulator is telling insurance industry representatives the new MIG is not the same thing as the old PAF, since there are more significant restrictions under the MIG than there were under the PAF.

Nuts and bolts of reform

“If a claimant sustains what is described as ‘predominantly a minor injury,’ there is a hard cap of $3,500 in funding for medical and rehabilitation benefits, including assessments,” says Kadey Schultz, an associate with Hughes Amys LLP. Schultz can’t help but note the potential ambiguity around the wording of the definition of “predominantly minor injury.” She says, “Those are fighting words . . . Don’t you love that. How are decision-makers going to apply the definition?”

A minor injury is defined both in the Statutory Accident Benefits Schedule (SABS) and the MIG as a sprain, strain, whiplash associated disorder, contusion, abrasion, laceration or subluxation and any clinically associated sequelae.

A strain or a sprain is defined as an injury to one or more muscles, ligaments or tendons with a partial — but not complete — tear. Subluxation is a partial, but not a complete dislocation of a joint. Whiplash is an injury to a person’s neck following a sudden acceleration or deceleration that does not exhibit objective, demonstrable, definable and clinically relevant neurological signs and a fracture or dislocation of the spine.

Under the new SABS, if an injury is minor, it is subject to a $3,500 medical or rehabilitation limit. This limit includes $2,150 of pre-approved funding for goods and services under the MIG. For a claimant to access the MIG’s pre-approved funding, a health practitioner — such as a chiropractor, dentist, nurse practitioner, occupational therapist, medical doctor or physiotherapist — must complete an OCF-23 (Treatment Confirmation Form). An insurer must confirm receipt of the form and advise if a policy is in place. No further approval is required to access the pre-approved funding within the MIG, Schultz says.

Once an active policy has been confirmed, the claimant can access the pre-approved funding available under the MIG. The pre-approved goods and services are divided into three blocks. Block 1 includes $775 in goods and services for the first four weeks after the accident. Block 2 makes $500 available for treatment in weeks five through eight. Block 3 includes $225 of available funding for treatment in weeks nine through 12.

The MIG also includes up to $400 for supplementary goods and services. These are for things such as treatment for additional minor injuries, goods for self-directed rehabilitation at home, assistive devices to help the return to daily activities and some supportive interventions. Such interventions could be advice or education, noting psychotherapy or psychological interventions are not specifically noted, Schultz says.

There is also a monitoring fee of $200. This is available only if the claimant does not move into Block 3 of treatment. If the claimant accesses Block 3 funding, the monitoring fee is no longer available. Finally, there is a $50 transfer fee, which is effectively an administration fee; it is accessed when the claimant switches service providers or facilities.

Once the MIG’s pre-approved funding of $2,150 is exhausted, $1,350 worth of med-rehab remains available under the $3,500 cap. But to access these additional funds, claimants must submit an OCF-18. This is an application for treatment and assessment (the OCF-22 application for pre-approval of an assessment or examination has been discontinued). Many in the industry believe this form will be a request for a psychological assessment, not for further physical therapy. The purpose of such an assessment would be to show there are psychological injures. This, in turn, would buttress an argument for being bounced out of the MIG; once the MIG no longer applies, the claimant’s limit for med-rehab costs would be increased to $50,000.

If a claimant has predominantly minor injuries, but wants to be exempt from the $3,500 cap, evidence must be presented showing that remaining under the cap would hinder rehabilitation. The health practitioner must provide compelling evidence that the claimant has a pre-existing condition that would prevent him or her from achieving maximal recovery if subject to the $3,500 limit.

If approved, the claimant would bounce out of the MIG and have access to $50,000 worth of med-rehab. However, as noted above, getting bounced out of the MIG means the claimant will have no access to attendant care, a caregiver, housekeeping or in-home assessment funding. Even if a claimant has purchased optional benefits, these optional benefits are not available to the claimant if he or she gets bounced out of the MIG.

Tougher definition of ‘minor’

The minor injury definition in the MIG is significantly more stringent than in the PAF, several sources note. “I would call it a more robust definition in the sense that it brings more components of an injury to the MIG,” says James Cameron, president of Cameron & Associates Insurance Consultants Limited.

A large portion of the failure of the PAF is because its
minor injury definition applied to such a narrow band of injuries, says Karin Ots, senior vice president of injury and casualty claims at Aviva Canada.

The PAF applied predominantly to whiplash-associated disorders (WAD). As a result, anybody could get bounced out of the PAF if they had non-WAD injuries, such as a hip contusion, for example, or multiple sites of injury, says Lisa Fazzari, claims technical advisor for accident benefits at The Economical Insurance Group. The MIG definition, in contrast, is “definitely much broader and more inclusive,” she says. “That’s probably the single biggest impact that the MIG has that we didn’t have in the PAF.”

The broader concept of minor injuries in the MIG is contained in the language of both the bulletin from FSCO and the MIG itself, Fazzari points out. The MIG states: “The SABS and this Guideline are intended to encourage and promote the broadest use of this Guideline, recognizing that most persons injured in car accidents in Ontario sustain minor injuries for which the goods and services provided under this Guideline are appropriate. Usage of the Guideline by all stakeholders will be monitored on an ongoing basis, with a view to early identification and response to inappropriate application or interpretation of the SABS and the Guideline.” For Fazzari, this means FSCO will be monitoring how treatment providers are using the MIG.

Since a majority of the funding available under the MIG is pre-approved, insurers can get claimants into treatment faster. “It’s a little more inclusive in providing immediate access to treatment without insurer approval,” says Irene Bianchi, vice president of claims and corporate services at RSA. “Time is always at a premium for people. The Guideline sets out specifically what goods and services will be paid for without prior approval. That should speed up any process, including this one.”

Also, the MIG gives insurers and claimants more flexibility in terms of treatment, Ots says. Claimants are able to get into treatment quicker, because there is no wait time for approval. Additionally, there are no parameters around the type of treatment, but rather around treatment cost and available funding.

Does the MIG = PAF?

Despite reasons for optimism, insurers remain concerned the same problems they experienced with the PAF will resurface with the MIG. “I think the general consensus with the MIG is that we are going to experience what we’ve experienced within the PAF,” says Tammie Norn, president of ProFormance Adjusting Solutions Inc. “I don’t think anybody to whom I’ve talked — including people on the committee who developed the Guideline — feel there is going to be a huge change. But I guess it’s a start.”

The MIG’s definition of a minor injury may be tighter, but the exemption for pre-existing conditions is a wild card. How far will this exemption be stretched? Will age or weight be considered a factor in recovery time? Also, psychological components will undoubtedly come in to play. When they do, will a claimant with psychological conditions remain within the MIG, will they move up to the $50,000 limit or will they be deemed to have suffered a catastrophic injury?

“I think there is going to be a lot of things that are going to knock it out, which is the challenge that we faced with the PAF,” Norn says.

“It will be just as the PAF,” agrees Laurie Walker, director of Ontario auto accident benefits at McLarens Canada. “There’s always going to be some reason why they can’t be in the MIG. It’s tighter [than the PAF] in the sense that there has to be compelling evidence, so they have made it a little bit more stringent. But I see the same scenarios: ‘Well this person had a sore neck before the accident and it’s chronic and they can’t be in the MIG.'”

Also, a health care practitioner’s perspective must be taken into account. More often than not, a claimant goes to the doctor very soon after an accident. Filling out a form saying an injury will resolve in 12 to 16 weeks requires a certain “leap of faith” on the part of the health care practitioner, Cameron says. “If you are a doctor, or if you are a health care practitioner, and you are examining someone who is your patient and they are complaining of injuries, are you going to fill out a form that actually limits their insurance claim right off the bat? Are you going to make a judgment call seven days after the injury that this is going to get better within 12 weeks and that’s all that’s required?”

As with any new definition or legislation, it remains to be seen how the courts of the arbitrators interpret some of the new terms. “That we have no control over,” Fazzari says. “We’ve had many arbitrators say it’s just a Guideline, it’s not the law, I don’t have to follow it.”

Ots says she definitely sees some loopholes. For example, the Guideline does not specifically address psychological issues. Instead, it is left wide open for interpretation, a cause of concern for many within the industry. Also, the term ‘sequelae,’ which refers to additional conditions that emerge as a result of the original injury, is not always clear.

“If it’s clinically associated sequelae of a minor injury, it falls within the minor injury $3,500 cap,” Ots says. “Whether or not something is defined as clinically associated sequelae remains to be seen.” She sites, as an example, someone who has a soft tissue injury and subsequently develops anxiety about driving. There will be an argument about whether that is clinically associated sequelae or a separate psychological injury disorder, she says.

Grey areas

It is often presumed that keeping claimants’ injuries defined squarely within the four corners of the MIG will reduce insurers’ claims costs. But this is not always the case.

Some observe there will be scenarios in which keeping an insured in the minor injury definition will be more expensive in the long run than bouncing them out and providing access to full funding. Take, for example, a 46-year old claimant who has worked his entire life as a general labourer. He sustains a minor injury in an auto collision and, in order to return to work, he needs pain medication. But he has used up the $3,500 available under the minor injury med-rehab limit and has no collateral insurance available. If the claimant can’t return to work because of the pain he or she feels, the insurer will be obligated to pay income replacement benefits until the claimant is potentially 65 years of age. (These payments would be ramped down at the age of 65.) This income replacement scenario would be much more expensive for the insurer than the option of simply paying for the claimant’s pain medication above and beyond the minor injury limit. But the MIG does not appear to allow insurers to pursue an alternative in which the insurers pay more than what is allowed under the minor injury limit.

“There are some strategic considerations that have to happen on a case-by-case basis, where you see that keeping the insured in the minor injury definition is going to be more expensive to the insurer than bouncing them out and having them with full medrehab funding available,” Schultz says. “That’s a real issue that needs to be considered. It’s complicated because the language in the SABS says that an insurer shall not pay beyond the $3,500 hard cap. That’s strong language.”

The issue of chronic pain is similarly tricky. Someone who develops chronic pain syndrome as a result of predominantly a minor injury sustained during the accident is still considered to fall within the minor injury limit. But in arbitration and in tort, claimants with chronic pain syndrome have been deemed to be catastrophically impaired. “There is a gap between what we are being told in the minor injury definition and what we know to be true from the decisions that flow from the Financial Services Commission of Ontario,” Schultz says. “While those responsible for drafting the new SABS are sitting on one floor at FSCO, on another floor a
re the arbitrators. We must acknowledge that even with the new regime, we are arguing cases before the same arbitrators, with the same historical perspective, normative values and decision-making patterns as have emerged over the last several years.”

How will psychological impairments fit within the MIG? Does a psychological diagnosis count as “clinically associated sequelae” and bounce a claimant out of the MIG if the other injuries were “predominantly minor”? Certainly case law supports that psychological injuries can render a person catastrophic. “If documentation supports the fact that significant psycho- logical impairments are affecting this person’s life, you are running the risk, if you don’t bounce them out of the MIG, of them decompensating potentially into a cat,” Schultz says. A catastrophic impairment changes the limits available for med-rehab benefits up to $1 million.

Yet another grey area emerges relating to partial or complete soft-tissue tears. The definition of a minor injury includes a partial, but not a complete tear. What happens if, months down the road, when the claimant has gone through public health care and received an MRI, the insured ultimately finds out he or she has a complete tear not a partial tear of a ligament or a muscle? A private MRI would have cost too much to be funded within the minor injury cap of $3,500, so it was not done early on in the claim. What happens then? Schultz asks. Now the injury has been exacerbated, causing the claimant more suffering because of the pain. What happens down the road if there are additional diagnoses?

The considerations above related to chronic pain, psychological injuries and soft-tissue tears all point to the larger issue of reduced funding of treatment and medication. Schultz terms this the “decompensation” issue. To make a long story short, under-funding of treatment and medication may ultimately bring an insured closer to the definition of catastrophic impairment than to the minor injury definition. “The case law shows that applying for cat — being found cat — is easier today than it ever has been in the past,” Schultz says. “As a result, insurers need to be strategic, because there will be cases where if you don’t find a way to bounce the claimant out of the MIG, then you might end up with a catastrophic claimant and everything that goes along with that.”

Getting enough under the limit

When all is said and done, industry sources are skeptical the new SABS will be able to clean up all of the problems related to the old SABS over the long haul. In order to make the new SABS economically viable, FSCO has told insurance defence counsel that 55 to 65 per cent of all claims need to fall within the MIG. “That’s impossible, right?” Schultz asks. “We are never going to see 55 to 65 per cent of cases fall under the MIG.

“The other thing is, with the reduction in the med-rehab limits and the other benefits for non-cat, we’re going to see the cat claims go through the roof. The idea that new SABS is more economically viable for an insurer than the old SABS? My respectful opinion is that we have missed the ball on that one completely.”

Insurers are, of course, optimistic that enough claims will fall within the MIG to reduce their very high accident benefits claims costs. But it remains to be seen how many claimants can find ways to be exempt.