Falling Under

Preliminary surveys are showing that greater than 50 per cent of all claims, post-September 1, 2010, are currently falling under the Minor Injury Guideline (MIG), advised Kadey B.J. Schultz, partner with Hughes Amy LLP.

Companies with preferred vendors are seeing even higher numbers of initial claims going into the MIG than those without preferred vendors. But in both instances more than half of all claims are falling within the MIG, she added while speaking at a seminar hosted by the Canadian Independent Adjusters’ Association’s Ontario Chapter in Toronto on May 13.

The stats

While this is not far off from the 55-65 per cent figure originally advised by the Financial Services Commission of Ontario (FSCO), Schultz warns the issue is not how many fall into the MIG at the outset, but how many stay in the MIG, which will only be borne out by time and the development of case law.

And this will remain to be seen for some time yet, as applications for mediation at FSCO have jumped a staggering amount with over 28,000 files at present, and more than a nine-month delay in FSCO’s acknowledgement and processing of the first stage of the dispute resolution process.

“We are starting to see disputes emerge for claims that are being put in the MIG, but we won’t see any case law for many months if not years,” Schultz added.

Ultimately, even when the decisions from FSCO start to come in, the data surrounding the MIG will not be complete, she added.

Settlements of cases where the insurer has paid more than the $3,500 hard cap for minor injury claims are unlikely to be accurately reflected within the statistics, Schultz said.

The issue

Statistics aside, the case law coming out of FSCO in a few years could have alarming financial consequences for insurance companies depending on how they handled the minor injury definition and applied the MIG.

“Insurers are handling the minor injury definition and the minor injury guideline differently” Schultz said.

Ontario Regulation 35/10 are the transitional rules with respect to the new Statutory Accident Benefits Schedule (SABS). In the normal course, while procedural changes can apply immediately, substantive changes to benefits are not to be applied until a policy has renewed. There is a lack of consensus as to whether the MIG would be considered a substantive or procedural change in benefits, with a claimant falling under a $3,500 hard cap versus the previous $100,000 med-rehab limit or process and benefit limits provided by the PAF, she notes.

The Financial Services Commission of Ontario (FSCO), has issued two bulletins, both stating the MIG applies regardless of the renewal date. A bulletin, however, Schultz points out, is not law. Many in the industry that she has spoken to, however, are applying the MIG immediately.

With that in mind, she cautions that in a few years when all the applications for mediation have been processed through FSCO and become arbitration or litigation files, this may become a very live issue for insurers. “It will only take one decision in favour of claimant that the MIG could not be applied until the policy had renewed for all insurers to have to roll back and reconsider claims from Sept. 1, 2010 on,” Schultz says.

While it would be easier if all insurers were doing the same thing, and applying the MIG regardless of the renewal date, at least to have consistency and to show reliance on FSCO’s guidance through its bulletins, Schultz says this is not the case.

In the end

Schultz foresees that in a few years, depending on the delay in getting matters through to the FSCO arbitration or litigation state, this issue will be clarified. Much like with the consequences of the Supreme Court of Canada’s decision in Smith v. Co-operators, which resulted in insurers having to review settlements and re-adjust or re-settle closed files, in the event the case law shows the benefit cap of $3,500 under the MIG was not to be applied until a policy had renewed, the industry may have to have to go back through a large stack of files. “What will that really mean?” she asks. “It will mean settle settle settle.”

To top it all off will be the arguments from the paralegals or lawyers that the claimant was placed in the MIG despite all the reasons provided that they should not be. First, is that the policy had not yet renewed. Second, the claimant had pre-existing conditions that proved the claimant should not be limited to the confines of the $3,500 hard cap.

“Then we go to the development of case law in the last year, particularly on the issue of special awards,” Schultz says. “The issue of putting the wrong files into the MIG because of the renewal date, pre-existing complaints or the nature and extent of the injuries complained of as a result of the accident is going to be explosive, in my respectful opinion, and requires insurers to strategically adjust new claims pending the development of case law to guide insurers in their practices” Schultz adds. “We are not going to have a decision on it for a long time. By then there are so many other issues that could have exacerbated the problem. Whether it’s the lack of provision of rehabilitation and medical benefits to the person with a resulting regression or worsened in their condition when they would have had an opportunity to improve; the interest payable on benefits found to be outstanding; a special awards claim on the interest and on the outstanding benefits, or the cross-over of heightened exposure to the tort defendant for increased damages where the AB insurer has not paid benefits.”

“What we know for sure,” Schultz concludes, “is that the next several years are going to be conflict ridden. With public perception and the plaintiff bar arguing that the September 1, 2010 changes are a reduction in benefits, a dis-enfranchisement if you will, there exists a very political (and financial) interest from the plaintiff bar in aggressively challenging the new SABS, starting with the application of the MIG.”