Subrogating Liability Claims

Under the Health Insurance Act the Ministry of Health and Long-Term Care has the right to subrogate for non-automobile liability claims. Under the Act, the Ministry has the right to recover medical and hospital costs incurred when treating people injured in an accident, except automobile accidents in the province, caused by someone else’s negligence, according to a 2007 Annual Report of the Office of the Auditor General of Ontario. This includes such accidents as slip and falls, medical malpractice and product and general liability. This right also exists under the Long-Term Care Act, 1994 for recovery of community based services. According to section 35 of the Health Insurance Act, “A liability insurer shall notify the General Manager of negotiations for settlement of any claim for damages including insured services and may pay to the Minister of Finance any amount referable to a claim for recovery of the cost of insured services and such payment discharges the obligation of the liability insurer to pay that amount to the insured person.”

The Ministry previously had the right to subrogate for injuries stemming from an automobile accident, but insurers now pay an annual assessment to cover these costs. Insurers are currently paying an annual levy of $142.3 million, Barbara Sulzenko-Laurie, vice president of policy at the Insurance Bureau of Canada (IBC), notes.

However, since the inception of the auto agreement, insurers have not been reporting non-auto accident-related claims to the same extent as they were prior to the agreement, Anne Utley, manager of the subrogation unit, supply chain and facilities branch, Ontario Ministry of Health and Long-Term Care, says.

In 2005, the auditor general of Ontario reported a number of deficiencies, including a lack of reporting on the part of insurance companies in relation to liability claims — many of the claims that were being reported were being done so by plaintiff’s counsel, Utley says. In response to the auditor general’s report, the Ministry of Health and Long-Term Care, met with the IBC to determine the best way to let insurers know about the need for reporting.

Sulzenko-Laurie conducted a survey in 2008 of insurance companies to ascertain what was being done and she learned that in virtually all cases insurance companies were deferring to legal counsel who were then reporting the incident to the Ministry.

The Ministry’s interpretation of the legislation, however, is that both insurance companies and legal counsel are required to report any non-auto related claim, she says.

According to the Ministry, when a settlement is in negotiation, the insurance company must report any non-auto that is still in open status. For legal counsel, there is the obligation to include the subrogated claim in the injured person’s claim for damages.

“However, it would be very beneficial for an insurer to report much sooner than that, because [the Ministry] has to research all the health care costs associated with the injury,” Utley says. “We have to go to various sources to get that information — such as online sources, community care access centers or hospitals — and then we have to discriminate which services are related to the injury and which are non-related. So it is beneficial to give some notice in order to be able to prepare that so then the claim can be settled in its entirety immediately as opposed to waiting to get the Ministry’s subrogated claim.”

Furthermore, by notifying the Ministry, insurance companies are able to avoid closing a file only to have to reopen it again to pay an additional amount for the OHIP subrogated claim. “In addition to the typical written claim procedures and staff notices, Aviva has a comprehensive computerized system for management of all injury claims,” David Hicks, vice president, casualty claim, Aviva Canada, says. “That system includes a field that specifically prompts the claim advisor to consider whether there is a subrogated health care claim from the Ministry, and the amount of any such claim. In conjunction with this, claim staff is encouraged to notify OHIP (or obtain claimant counsel confirmation of notice) early in the claim process, rather than waiting until settlement negotiations are under way. This early notice helps to avoid the possibility of forgetting about the OHIP claim, or the possibility of jeopardizing a settlement due to delays that can occur when notices are not sent until the last minute.”

“Although some insurers may feel that early notice can create problems where it is later concluded that the insured defendant is not liable (or not fully liable) for the claim, this has not been our experience,” he goes on to say. “We have not encountered any significant difficulties arising from our early notice protocol.”

When reporting to the Ministry, insurance companies need only provide basic information such as the date of the incident, a brief description of the incident (ie. slip and fall, dog bite, etc.), the name of the injured party and some identifiers, such as a current address, date of birth or the claimant’s OHIP number.

“Anything that [an insurance company] can give us that can help us direct to the right services,” says Susan Cole, senior business consultant, supply chain and facilities branch, Ontario Ministry of Health and Long-Term Care.