ICBC Law

One of the foundations of our tort-system is accountability.  Those harmed at the hands of others careless or criminal actions deserve compensation.  Those who act carelessly and cause harm ought to be held accountable by providing the compensation.  This goes to our basic understandings of fairness.

When governments decide to strip people of their right to sue and instead create no-fault systems of compensation accountability is removed from the picture.  This can lead to absurd results as demonstrated in a story published last week by the Globe and Mail.

Accountability matters.  At its most basic level no-fault insurance takes away compensation rights of victims and redistributes these to those that cause harm.  Examples such as the one pointed out by the Globe and Mail should act as a reminder to Government that removing accountability from the Civil Justice System is a fundamentally flawed policy.

The BC Utilities Commission recently posted a number of documents which were filed in support of ICBC’s request for a modest insurance premium increase.  These are worth reviewing in full for information relating to ICBC’s fiscal health.  From a public perspective the good news is that ICBC operates profitably.

ICBC stresses “changes in investment income” as one of the main reasons behind the rate increase request.  As previously discussed, while their investment income is down, if the government didn’t scoop ICBC’s revenues when their investment income was high a rate increase would not even be contemplated at this time.  When your profits are taken from you its hard to save for a rainy day.

The other point stressed by ICBC relates to rising bodily injury claims.  Specifically ICBC’s Manager of Regulatory Affairs says “the main  change from past  years  being  higher  claims frequency“.  With this in mind perhaps the most interesting data in the documents are the hard statistics relating to the severity and frequency of bodily injury claims.  I reproduce some of the key charts below.

Its worth noting in analyzing the data from 1996-present there is an overall trend of bodily injury claims declining in frequency.  Specifically, Weekly Benefit Claims are down in frequency and have modestly increased in severity. Personal Medical Rehab Claims are down in frequency and steady in severity.  Personal Death Benefit payments are down in frequency and steady in severity and finally Personal Bodily Injury Claims continue to be down in frequency with a modest increase in severity.

I welcome this information being publicly available so British Columbians know that hard data supports BC’s full tort system as being financially viable.  We are fortunate to live in a Province where an informed public is not fooled into giving up their legal compensation rights and ability to access justice due to a perceived auto insurance “crisis“.

Earlier this week ICBC released their 3rd Quarter financial results with an accompanying press release stating that they will be seeking a modest increase in basic insurance coverage rates to counteract the consequences of “rising bodily injury costs and falling investment income“.

ICBC is looking at an annual rate increase of about $30.  Yesterday ICBC’s CEO wrote an Open Letter To Customers stating that “Today, however, we are facing new pressures. Like other companies and individuals, the challenging world financial markets are negatively affecting us. While our investment returns continue to perform well against the markets, our investment income has dropped by $38 million compared to last year. Our best estimate is that our investment income at year-end will be $90 million less than in 2010.”

While it is true that ICBC’s investment income is down and claims  payouts fluctuate year to year, those reasons don’t explain why a rate hike is needed.  Historically ICBC is well managed and profitable, I’ve discussed this in the past.  They have generated hundreds of millions in net revenues year over year with the current premiums in place.   ICBC did what any financially responsible insurer does with such profits and built up substantial reserves to act as a safety net for leaner times.  The reserves were so significant that the Government decided to scoop 3/4 of a billion dollars from ICBC’s coffers.

With current rates ICBC can weather the storm of market volatility and the ups and downs of claims payouts year over year.  All this with net revenues significant enough to get the company through leaner years.  The Government is short on funds, they scooped money from ICBC and that is why motorists are faced with rate increases.

Below is a brief article which was first published yesterday at Slaw.ca, one of Canada’s best read and most recognized legal blogs.  For your convenience I republish the article here in its entirety.  If you find this topic of interest I suggest you visit the original article and weigh in on the comments that follow.

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I’ve written many times that the phrase tort ‘reform‘ is often used in association with efforts to strip the rights of injury claimants.  Reform, however, is a neutral concept in and of itself.  Reform simply means change and the change could be for better or worse.  With this in mind  I’d like to share a tort reform idea for the better which recently crossed my mind.  In short the idea is to add a pool of liquidity to rectify the injustice of dry judgement.

The thought crossed my mind as I was reading reasons for judgement released this week by the BC Supreme Court, New Westminster Registry.  In this week’s case (Saether v. Irvine) the Plaintiff was injured when the Defendant battered him.  The consequences were “profound and catastrophic” causing a brain injury that “severely compromised (the plaintiff) in virtually all facets of his life“.  Damages of $1,075,000 were assessed to cover the Plaintiff’s anticipated future care costs alone.  Given the fact that this case involves an intentional tort it is a safe bet that this judgement will be uninsured and likely (at least partially) dry.

Reading this reminded me of a 2005 case (Chow v. Hiscock) where the Court expressly recognized the injustice of dry judgement facing a plaintiff left “in a permanent semi-vegatative state” following a “brutal, unprovoked assault“.  The Plaintiff’s future care costs were anticipated to exceed $4,000,000.  Madam Justice Koensberg made the following comments hoping the Plaintiff would some day be able to receive some of these funds from the uninsured defendants:

[40]           Can I say that this is still a case where punitive damages should be awarded?  If I were to award punitive damages, it would be purely symbolic.  I have heard nothing which indicates that the magnitude of this award or even some small part of it is likely to be payable by any of these three young men.  One can hope that they find a straight path to earn a significant amount of money or that one even wins the lottery, so that the earnings could be available to increase Mr. Johnson’s quality of life.

The law recognizes that those harmed through the fault of others are entitled to reasonable compensation.  When it comes to negligently caused harm defendants are often insured and plaintiffs can collect their judgements.

In cases where Defendants hold inadequate insurance examples can be found where legislatures have intervened to ensure victims can collect on their judgments.  For example, in BC, Section 20 of the Insurance (Vehicle) Act provides a pool of $200,000 of available compensation from ICBC for damages caused by uninsured motorists.  A further example is the requirement for BC motorists to purchase a minimum of one million dollars of under-insured motorist protection coverage.

When plaintiffs suffer harm through intentional torts, however, there often is no insurance to protect the wrongdoer or compensate the victim.  This is an unfair reality in Canadian law.  Victims harmed through assault, battery, sexual molestation and other intentional acts are often faced with dry judgments.  When they seek legal advice they are often turned away being told that litigation may not be worth the effort unless the Defendant has deep pockets

There is no justification I can think of making it fair for a car crash victim to be able to collect their judgement from a pool of money created by the government when the victims of crime are left with dry judgments.

The financial well being of a defendant has no bearing on a victim’s right to damages.  If the government has seen fit to create a pool of funds for victims of motor vehicle collisions to collect from surely a similar system can be created to allow victims of intentional torts facing dry judgments.  This is a rough idea.  Thoughts and feedback are welcome from lawyers and non-lawyers alike.

On October 28, 2011, Coquitlam Now published an article by Neil Mohinrda, the director of the Centre for Financial Policy Studies at the Fraser Institute.  The article was titled “Maintaining ICBC a disservice to BC drivers“.

In short Mr. Mohinrda discussed the perceived virtues of private insurance while criticizing the perceived short-comings of public insurance.  While I’m never opposed to a private/public auto insurance debate, or to scrutiny of auto insurance premiums, what the one-sided article is sorely missing is a discussion of what people get for their money in different Canadian Jurisdictions.

I’ve addressed this topic before.  A meaningful discussion of insurance rates simply can’t be had without looking at the product.  Furthermore the private insurance industry is quick to call for the stripping of victim rights in order to have a functioning system.  BC’s experience demonstrates this is far from necessary.

I was glad to see that Mr. Mohindra’s article was quickly called out for its short-comings.  You can click here to read the criticism raised by Kellee Irwin, ICBC’s Vice President of Personal Insurance who correctly points out that

Mr. Mohindra’s column mentions Alberta on a couple of occasions. While you may be able to get a cheaper insurance premium there, they fail to point out that our customers’ medical and rehab benefits are three times more than those offered in Alberta, New Brunswick and Ontario. In comparison to our $150,000 in medical and rehab coverage in B.C., those three provinces offer $50,000 while Nova Scotia provides $25,000.

If we’re making comparisons between provinces, which we agree is difficult to do, it should also be noted that drivers in Alberta, New Brunswick and Nova Scotia are limited in what payments they can receive. Those provinces have systems that are variously based on caps or deductibles on pain and suffering awards. This is not the case in B.C., where drivers are entitled to take the at-fault party to court for damages

For more analysis you can click here for a good overview from a BC lawyer who previously practiced in a private insurance jurisdiction and shares some observations of the private insurance industry.

Nova Scotia appears to be taking a step in the right direction to undo the harm caused by previously implemented tort ‘reform’ measures.

By way of background, Nova Scotia stripped the right of people injured in their Province to be properly compensated for soft tissue injuries caused by motor vehicle collisions.  The Province placed an artificial “minor injury cap” on these types of claims.  The cap was ultimately upheld as constitutional.

Just because something can be done, however, does not mean it should be.  After years of reduced compensation rights to the benefit of insurance company profits Nova Scotia realized that stripping accident injury victims of their rights was a poor move.

With this background in mind I was pleased to read a headline that Nova Scotia may be preparing to (at least partially) bring back tort rights for soft tissue injuries.  Canadian Underwriter reported the following on October 24, 2011:

An optional tort product appears likely to be offered in Nova Scotia in the future, according to Ken Meyers, former chair of the Insurance Brokers Association of Nova Scotia (IBANS).

“It appears clear now that there will be an optional tort product introduced,” he said at the 91st Annual Convention of the Insurance Brokers Association of Ontario (IBAO) in Toronto on Oct. 19.
The proposal for an optional tort product is contained in The Final Report Addressing: The Nova Scotia Automobile Insurance Review, published in May 2011.

By purchasing this option, an insured would not be subject to the $7,500 cap currently in place in Nova Scotia for soft tissue injuries.

“In the automobile insurance reforms of 2003 undertaken in Nova Scotia, some stakeholders felt that removal of the right to sue for pain and suffering had the impact of unfairly limiting their options and choice,” the report says in its analysis of the issue.

“Enabling consumers to purchase a full tort option would serve to restore that choice factor, the importance of which is a strongly held view of some consumers.

The article then goes further and states that “Recognizing that this ‘choice’ will inevitably carry a higher premium, it will be important that the product is priced so that there is no likelihood that it will be cross-subsidized by the non-tort product“.

This is where my positive reaction ends.  It is not necessary and wrong to require an individual to pay in order to access their tort rights.   As previously discussed, stripping injury victim rights is not necessary to have a profitable auto insurance system.  Suggestions to the contrary should be closely scrutinized by the press and public alike.  For the time being, however, I commend Nova Scotia for this small step in the right direction.

On Sunday, September 25, 2011 two public awareness events will be held to bring attention to the need for wrongful death law reform in British Columbia.

The Events are scheduled at 2:00 pm in Vancouver at the backsteps of the Vancouver Art Gallery and at the same time at 1850 Shannon Lake Road in West Kelowna.  You can click here for more details.

I’ve written about the need for wrongful death law reform before.  If you are in Kelowna or Vancouver this weekend and would like to learn about the shortcomings of BC’s wrongful death laws and steps that can be taken to positively change this area of the law I encourage you to attend these important public awareness events.

Every so often a sensational case makes headlines that gets dismissed after trial. Pundits and the press pick up on these stories.  Such cases can receive disproportionate media attention and are sighted as key examples for the need to have tort “reform“.  The other catchphrase that’s thrown around is “lawsuit abuse”.

“Reform“, however, is not necessary.  The BC Supreme Court already has tools built in to discourage litigation.  We have a “loser pays” system which exposes losing litigants to significant costs consequences.  Additionally, if a litigant continues to pursue actions without merit they can be locked out of the Court process entirely.  Reasons for judgement were released this week by the BC Court of Appeal demonstrating this tool in action.

In this week’s case (Keremelevski v. ICBC) the Plaintiff brought an application which the Court described as having “no sensible basis in law or fact” and had “absolutely no chance of success“.  The Plaintiff’s application was dismissed but the Court noted that “The current proceedings, wholly devoid of merit and lacking any possibility of success, are simply another chapter in a long series of proceedings launched by the applicant in this Court”

The Court went on to make a so-called vexatious litigant order and in doing so provided the following reasons:

[12] Mr. Keremelevski has clearly demonstrated that he has no real comprehension of the court process and he persistently files applications in this Court that are completely unmeritorious. As Mr. Justice Frankel observed in the above excerpt from the Houweling case, judicial resources are not infinite, and the filing of what could justly be described as a blizzard of applications does take up valuable court time that ought to be used to hear other matters that have substance. As Frankel J.A. also observed, while persons are entitled to have their day in court, they are not entitled to be always in court “day after day in the futile pursuit of remedies to which [they are] not entitled”. As I observed, Mr. Keremelevski has initiated a significant number of proceedings in this Court that have had no possibility of success. He has also sought unsuccessfully leave to appeal to the Supreme Court of Canada in some of the proceedings. As is the case with the instant proceedings, it appears these matters have been devoid of merit with no possibility of success. In these circumstances, it seems apparent to me that it is now requisite for this Court to take action to prevent the misuse of its process. It is time, and indeed probably past time, to make an order in the case of Mr. Keremelevski in the terms made in the earlier cases referred to that Mr. Keremelevski will be precluded from filing any further documents in this Court without leave first obtained from a justice of the Court in chambers. As I observed in the Booty case, such an order is requisite to prevent misuse of the litigation process.

Earlier this year I wrote about the UK Supreme Court decision stripping expert witnesses from immunity from lawsuits when they provide careless opinion evidence.

Some of my comments on this topic were picked up by the Law Times News where I exchanged my views that Canada should follow the UK’s example.  These views must have the medical community up in arms, right?  Surprisingly the answer appears to be no.

A follow up article published in the Law Times was recently brought to my attention where Dr. Michael Ford weighed in on the debate.  Interestingly he agreed that these lawsuits should be allowed arguing that they would bring an important element of accountability to the medico-legal process.  Specifically he stated as follows:

I like Britain’s approach because everyone, including expert witnesses, should be responsible for their actions.

That may seem simplistic, but if Canada adopted this approach, I would have no problem. It’s only fair. For example, if I assault someone on the street, I should pay the price.

By the same token, if I make an error or I provide care that’s below standard, I should be held responsible and I am. I don’t see why that responsibility should disappear because I’m now acting as an expert on the witness stand in court.

You can click here to read Dr. Ford’s full article.  As always, I welcome comments from any other doctors and lawyers (or anyone interested in this topic).  Feel free to weigh in on the debate.

Alan Shanoff of the Toronto Sun recently authored an interesting piece questioning whether insurance company practices could be viewed as insurance fraud.

When insurers catch customers defrauding the system the stories tend to make headlines.  That is a good thing.  Fraud should be weeded out and publicly condemned.  Alan suggests that these stories, however, may not be the only form of insurance fraud.  If insurers use practices that result in their customers being wrongfully deprived of their insured benefits can that constitute insurance fraud?  Should the media pay equal attention to stories of insurers short changing their customers?

As previously discussed, insurance fraud from either side of the fence deserves rebuke.   When claimants are unlawfully deprived of their insurance benefits they don’t have the deep-pockets that insurers have access to in order to find a legal remedy.  Alan makes some interesting observations in his article and I encourage anyone interested in the insurance fraud debate to review Alan’s article.