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Fundamental Flaws in Injury and Disability Law | Part Three: Accident Benefits Reductions

Did you know that your entitlement to benefits has been reduced by your insurance company on a steady basis since 1990? 

Did you know that income replacement benefits are only $400 per week? 

Did you know that in 1994 income replacement benefits were $1000 per week? 

What are Accident Benefits? 

A no fault auto insurance scheme was introduced in 1990. It created a hybrid system where anyone who was injured in a car accident, even if it was their fault, would be entitled to medical and rehabilitation benefits and income support benefits. These benefits would be paid by the persons own insurance company. The trade-off was that someone who was injured by the fault of another could no longer sue, unless they suffered from permanent and serious injuries. In 1994 further changes were introduced with Bill 164. To the list of benefits, housekeeping and home maintenance, attendant care, caregiver benefits and non-earner benefits were added. That was the beginning of drastic changes to the system which have not stopped since.

This two tier system still applies today, the difference is that what is offed under the Statutory Accident Benefits Schedule has been reduced, reduced, and reduced. All of the reductions and amendments were made in the guise of lowering insurance premiums and preventing fraud. The reality however, is that there really isn’t an “issue of fraud” and insurance premiums have not been reduced.

The Changes – How did I get left with almost nothing??? 

Bill 164 

Bill 164, the first amendment to the new system, brought with it an income replacement benefit of $1000 per week, and medical and rehabilitation benefits had a limit of $1,000,000.00. It also introduced benefits housekeeping and home maintenance, attendant care, and non-earner benefits.

Bill 59 

In 1995 only 22 short months later, Bill 59 made sweeping changes. Income replacement benefits were reduced to $400 per week. Medical and rehabilitation benefits were reduced from $1,000,000 to $100,000 for non-catastrophic injuries and attendant care benefits were reduced from $10,000 per month to $6,000 per month for those catastrophically injured and $3000 for those with non-catastrophic injuries.

Bill 198 

Then came Bill 198 in 2003 and with it, came more changes. This was the introduction of what was called the pre-approved framework for medical and rehabilitation benefits for whiplash

injuries, a one year waiting period for settlements, and it required medical assessments for denied benefits. This bill also capped the amount that treatment providers were allowed to charge for their services.

The 2010 Reforms 

The 2010 reforms under Ontario Regulation 34/10 brought more sweeping changes. If an accident victims did not suffer a broken bone or significant neurological injures, or did not require surgery, their medical and rehabilitation benefits would be capped at $3500. For those that did suffer broken bones, surgical repairs, or significant neurological symptoms, their medical and rehabilitation benefits were reduced from $100,000 to $50,000 which could be used over the course of 10 years. The housekeeping and home maintenance benefit was eliminated completely for everyone unless a catastrophic injury was sustained. Furthermore, attendant care benefits were reduced from $72,000 to $36,000 for non-catastrophically injured.

Even more significant were the changes to attendant care that applied to both catastrophic and non-catastrophic injuries. The new legislation provided that the expense must have been incurred. This meant that in order to receive the benefit the person providing the care must either be a paid professional or a family member that stopped working. This in turn meant if a loved one cared for you, they would not be paid unless they missed time from work, and would only be paid the amount of time lost from work rather than the actual cost of providing the service. Most people who need assistance showering, changing, toileting, making meals and so forth prefer it to be done by a family member. Under this legislation, which continues to present, there would be no payment for these duties, unless there was a loss of income associate with it. These obligations can be quite time consuming, take away from other household and family obligations but unless work was missed , this family member would not be compensated or their time.

This level of care if provided by a family member can also be very stressful and taxing on family relationships. In many cases a family member becomes primarily a care giver and support worker rather than a wife, husband, mother, father, sister, brother, or companion. Changing familial roles can has significant negative effects for the caregiver.

2015 Reforms 

In 2015 the government implemented additional accident benefits changes. This time the changes restricted the ability to hold insurance companies accountable for their unfair and unjust behaviour. It effectively removed the penalties that judges or arbitrators could impose on their improper conduct. Without penalties for improperly denying benefits the insurance companies have no incentive to act fairly. This in turn means delays and denials of payments.

Where are we now? The 2016 Reforms 

In the last round of reforms we saw the most dramatic reductions in benefits. Despite all of the previous cuts, insurance companies continued to espouse that too much money was being spent on accident benefits, and cuts were required to keep auto insurance prices down. The matter of auto policy insurance rates is always an election issues, and to reduce rates, benefits keep getting cut. However, a study by Dr. Fred Lazar and Dr. Eli Prisman, from the York University

Schulich School of Business has concluded that Ontarians have likely overpaid for auto insurance by between $3 and $4 billion for the period of 2001 to 2013. 

This report has also identified that profits for the auto insurance sector are on the rise. And yet, premiums remain as high and the justice, care, and fairness remain at an all-time low.

Medical and Rehabilitation Benefits & Attendant Care 

These benefits were combined and the overall amount was also reduced. Prior to the changes for those who suffered non-minor injuries, there was a $50,000 entitlement to medical and rehabilitation benefits and $36,000 available for attendant care. These benefits were not paid automatically, rather they are paid over time once the need for them have been established. As such, not everyone would receive attendant care benefits and not all would use the entire $50,000 in medical and rehabilitation benefits, but it was available for those who needed it. Consequently, those are the people who are most seriously injured and continue to struggle from their injuries years after the car accident.

As a result of the changes, these benefits were reduced to a combined amount of $65,000 ( a $21,000 reduction) and were limited to a duration of 5 years where they were previously available for 10 years.

Catastrophic Impairments 

In 2016 benefits for those who suffered from a catastrophic impairment were reduced by $1,000,000.00. Prior to these changes a claimant would have been entitled to $2,000,000.00, with $1,000,000.00, for medical/rehabilitation and $1,000,000.00, for attendant care. The 2016 cut combined these benefits and reduced the amount to $1,000.000.00. These changes had a dramatic impact on those who suffered the most serious injuries, and their families.

If you or a loved one have been injured so severely that it would require 24/7care for the rest of your life the costs associated with this are astronomical. To illustrate, lets assume a 45 year old male suffers a severe brain injury which almost always requires 24/7 care for the rest of their life, then you are looking at 35 years of attendant care payments based on the average life expectancy of 80 years old for a male. If you had to pay market rates for this case, ie you hire a personal support worker to provide the care, based on an assumed hourly rate of $20.00 to $30.00 per hour, you are looking at a lifetime expense somewhere between $6,132,000.00 and $9,198,000.00 just to provide the care required for the injured person. This would not include any expenses for treatment or rehabilitation.

Even before the cuts is clear how a catastrophic injury can devastate a family.

The good news is that the current government is proposing to restore the limits back to $2,000,000.00. This would greatly help those who need it most. The not so great news is that when they made changes to the benefit limits in 2016, they also made changes to the definition of catastrophic impairment. These changes made it much more difficult to be designated as having suffered a catastrophic impairment.

One of the most significant changes to the definition was the definition applicable to those who suffered serious brain injuries. The new version requires reliance on the Glasgow Outcome Scale rather than the Glasgow Coma Scale. The outcome scale, while it may makes sense on paper, has a devastating effect on those who have suffered a traumatic brain injury. Under the Outcome Scale, an injured party must wait, in may cases months or years, to be classified as having sustained a catastrophic impairment. The classification process becomes dependant on how the victim recovers.

If one has sustained a traumatic brain injury, the first few months of recovery are critical. Without the ability to be classified as having sustained a catastrophic impairment immediately proceeding the incident means these victims are not entitled to benefits that would allow them access to the care they need. For example, a person who sustains a traumatic brain injury that requires 24/7 care and supervision would only be entitled to receive $3000.00 per month rather than $6000.00 amount that would be available to someone deemed have sustained catastrophic injuries. Not only would this leave a significant shortfall as based on the calculations above, if one requires 24/7 care, the expense would be much higher than $3000.00, but based on the changes to the medical and rehabilitation benefits, this would also consume all funds for that injured persons treatment and recovery. This is based upon the above noted change where medical and rehabilitation benefits became combined for non-catastrophic injuries.

These changes can devastate families and impair the injured parties recovery. Unfortunately, there are no proposed changes to restore the old definitions at this time.

Non-Earner Benefit

The Non-Earner Benefit also took a big hit with the 2016 reforms. A benefit that was once payable for life at the rate of $185.00 per week for those who suffered a complete inability to carry on a normal life, has been reduced to being payable for only 2 years. Students took the hardest hit, as a student or recent graduate under the old scheme would be entitled to $320 per week after the two year mark if they continued to suffer a complete inability to carry on a normal life. The benefit is only available for two years maximum, at $185 per week, regardless of educational status.

IRB – $400 per week

It is also important to note what has not changed during any of the recent revisions to accident benefits. The income replacement benefit, meant to provide an person injured in a car accident with income if they are unable to return to work, has been capped at $400 per week since 1996. That’s right, for 23 years there have been no increases to the income replacement benefit despite the rising costs of living. Prior to 1996, the income replacement benefit was capped at $1000.00, which means that not only did the benefit see a dramatic reduction in 1996, it has not kept up with the times. Insurers now offer you the ability to increase the $400 limit by purchasing additional coverage.

The Right to Sue Big Insurance

In 2016 we also saw the government pass a law that removed the injured victims right to sue an insurance company for the denial of their benefits. Once again, placing all the power in the hands of the insurance companies.

Conclusion

Benefits available to you under the accident benefits schedule are simply inadequate. They have been eroded and obstacles have been put in place to limit what you can access. Simply put, if you are in a car accident and sustain a serious injury, non-minor or catastrophic, you are not adequately covered under a standard policy.

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