Catastrophic Claims in Ontario Presented by Stephen Moore

Catastrophic Claims in Ontario Presented by : Stephen Moore, based on an earlier presentation by Jess Bush

Why are Catastrophic Claims so Expensive? 4 The cost of catastrophic claims is increasing at an alarming rate; 4 This presentation will attempt to explain why; 4 This presentation will focus on auto claims in Ontario because they raise more and more complex issues than other types of tort claims;

The Usual Tort Heads of Damages 4 General damages; 4 Family Law Act damages*; 4 Past loss of income; 4 Future loss of income; 4 Past medical care; 4 Future medical care*; 4 Loss of interdependent relationship*;

Tort Damages, continued 4 Guardianship Fees and Management Costs*;

General Damages 4 Catastrophic general damage cap is $100, 000 in 1978 dollars; 4 With inflation that cap is now approximately $325, 000; 4 FLA general damages tend to cap at $100, 000; 4 Parents of catastrophically impaired children usually receive about $75, 000

Past Loss of Income 4 Pre-trial loss of income claims are capped at 80% of net income; 4 Unless that number exceeds $400 per week, the past loss of income claim is usually very small;

Future Loss of Income 4 Future loss of income is based on 100% of the gross loss; 4 Even if the SABs insurer cashes out there is almost always a big gap between the available future collateral benefits and the tort claim;

Medical Care 4 Most of the past medical care is covered by the SABs unless they have run out; 4 There a myriad of future care items that can really increase the cost of future care and they include: 4 Attendant care; 4 OT and Rehabilitation; 4 Community Integration;

Medical Care Continued 4 Equipment including computers, communication devices etc. ; 4 Transportation expenses; 4 Home modifications;

Attendant Care* 4 Will it be provided privately or by an agency? 4 Agency care is usually about double the cost of privately provided care; 4 Will it be provided by a PSW, RSW or RNA? 4 PSWs cost about $24 per hour, RSWs about $40 -45 per hour and RNAs are over

Rehabilitation* 4 The rehabilitation expense is often one of the most abused heads of damages; 4 One needs the input of a physiatrist and an OT to combat these claims; 4 OTs and RSWs tend to cost 2 -4 times as much as PSWs;

Community Integration* 4 Special workers are appointed to help the person re-integrate; 4 They tend to be RSWs or the equivalent and do things like take the plaintiff to the movies or the library or out to a bar;

Equipment* 4 Often very expensive but often unproven home environmental controls are recommended; 4 Expensive computers and programs are recommended that are never used only sparingly; 4 Equipment and expensive software is often recommended to assist in communication;

Transportation 4 Usually a claim for an expensive van with no credit for another vehicle the plaintiff would buy anyway; 4 Claims for drivers in addition to attendants;

Home Modifications 4 Elaborate home modifications are recommended usually without giving any credit for housing expenses that would normally be paid out of a person’s salary; 4 Claim is often for 3 or 4 modifications during a lifetime;

Loss of Interdependent Relationship 4 What is it? 4 It is worth between $50 and $150, 000 but the reports can put the number up much higher; 4 Attack the number or attack theory?

Guardianship and Management Fees 4 Required if the plaintiff lack competency; 4 Covers the charges by the corporate guardian (usually a trust company) and the personal guardian plus the legal costs for passing accounts; 4 Can easily add 15% to the future care costs; 4 Shop for better rates on these items;

Who Pays for What 4 Pre-trial claims are reduced by any available collateral benefits; 4 Most collateral benefit payors have no rights of subrogation; 4 Tort defendants pay all future losses and receive an assignment of all future collateral benefits;

What Collateral Benefits are Available 4 OHIP pays for all hospital expenses and most medical treatment provided by MDs; 4 It generally does not cover care provided by physiotherapists, OTs, chiropractors, massage therapists etc. ; 4 OHIP has no right of subrogation unless the automobile is from out-of-province;

Statutory Accident Benefits 4 First party coverage available from an insurer or the government for all persons injured in a motor vehicle collision in Ontario; 4 For non-catastrophic claims it provides up to $400 per week in income replacement benefits based on 80% of the person’s pre-accident net income;

SABs, continued 4 It provides up to $3, 500/$50, 000 or $100, 000 of medical/rehabilitation benefits for a period of 10 years; 4 It provides up to $36, 000/$72, 000 of attendant care ($3, 000 max per month) benefits for a maximum period of 104 weeks; 4 It provides other benefits including caregiver, visitor expense, housekeeping

SABs Catastrophic Impairments 4 The med/rehab max jumps to $1 million and is payable for life; 4 The attendant care benefit maximum moves to $1 million with a monthly maximum of $6, 000; 4 Case manager services;

Other Collateral Benefits 4 The tort defendant also gets to deduct other collateral benefits such as: 4 some LTD payments; 4 amounts available under EHC insurance; and 4 CPP disability pensions;

Future Collateral Benefits 4 Tort defendants pay full future damages and, in exchange, receive an assignment of all future collateral benefits; 4 This means the tort defendant must front the cash for all future costs and income losses; 4 SABs carriers will often cash out their future obligation and if this is done the tort defendant can deduct the cash out;

Future SABs, continued 4 The deductions must be deducted head by head; 4 For example, the future IRB must be deducted from the future loss of income claim; excess benefits cannot be deducted; 4 Some SABs are not deductible such as the non-earner benefit;

What is Driving the Numbers Up? 4 Increasing costs of medical care; 4 Changes in the discount rates; 4 Professor Coyte and discount rates for medical expenses; 4 The courts preference for home over institutional care;

Discount Rates 4 As recently as 2003 the partially mandated discount rate was 2. 5% 4 It is now 0. 75% for the first 15 years and 2. 5% thereafter; 4 This allow will drive up the cost of future care for a period of 25 years by 18. 6 %;

Professor Coyte 4 Evidence can be lead to vary the regulated discount rate; 4 Professor Coyte provides evidence that the cost of medical care rises faster than the cost of other goods by about 1%; 4 This lowers the discount rate to -0. 25% for the first 15 years and to 1. 5% thereafter; 4 This alone can increase future care costs

Combined Impact on Future Care Costs 4 The drop in discount rates since 2003 plus Professor Coyte’s reduction to discount rates when combined can increase the cost of future care by over 40% over what they were in 2003; 4 This increase ignores that actual increase in the cost of such services since 2003.

Home Care vs. Institutional Care 4 The courts prefer home care to institutional care regardless of the increased cost;

Strategies to Reduce Claims 4 Try and get the SAB carrier to cash outinvite them to the mediation; 4 Have the appropriate experts review all of the recommendations of the plaintiff’s experts; 4 Make sure someone investigates the plaintiff’s life expectancy; 4 Try and demonstrate that institutional

Strategies, continued 4 Watch for duplication and attempts to claim costs that are not extraordinary; 4 Where there is contributory negligence make sure you deduct it before deducting collateral benefits; 4 Where there is contrib consider making the plaintiff prove past losses; 4 Consider using Professor Manga.

Structures 4 They can be used to avoid gross up for taxes on future care costs; 4 Be careful, if the future care claim is based on CPI or CPI plus 1%, then the cost of the structure can be greater than the actuarial number; 4 Trying to sell a structure to an Ontario plaintiff represented by a good lawyer is usually a waste of time;