Desjardins. Maria Cece Senior Manager Automobile Insurance Policy Unit

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1 Desjardins Maria Cece Senior Manager Automobile Insurance Policy Unit Ministry Industrial of Finance and Financial Policy Branch 95 Grosvenor Street, 4 th Floor Toronto, Ontario M7A lz1 Re: DGIG Response to Interim Report- Ontario Automobile Insurance Dispute Resolution System Review We read with great interest the Interim Report prepared by Justice Cunningham in conjunction with his colleagues on the review panel. The report's contents demonstrated an excellent grasp of the complex issues being faced by the various stakeholders involved in the accident benefits dispute resolution system. The report's preliminary observations and recommendations are thoughtful and incisive and have provided insurers and other stakeholders much to reflect on. We would like to take this opportunity to provide Desjardins' response to the Interim Report's observations and recommendations. We will organize our response along the lines of the report's general principles. Desjardins supports the report's recommendations with respect to improving the timeliness of access to the dispute resolution system. In this regard, we strongly support the introduction of delivery standards by way of timelines for scheduling arbitration pre-hearings and hearings. Further, we welcome the introduction of time limits for the rendering of arbitration decisions. However, as was noted in the report, there are many timelines already prescribed in the Dispute Resolution Practice Code with respect to the conduct of mediations and arbitrations. Unfortunately, these timelines are ignored by all of the DRS participants. Accordingly, we would suggest that whatever timelines are implemented, that some methods of holding the parties and the decision makers accountable with respect to those time lines also be put into place. Head office and Quebec Operations 6300, boul. de la Rive-Sud P.O. Box 3500 Levis, Quebec G6V 6P Main Office Outside Quebec 3, Robert Speck Parkway Mississauga, Ontario L4Z 3Z

2 Desjardins agrees with the recommendations which would result in a more flexible, less costly and more efficient dispute resolution system that provides different tracks or processes based on the quantum of the claim and the complexity of the issues involved in a particular matter. Desjardins supports the report's recommendations with respect to introducing greater accountability and equalization in relation to the cost burdens borne by the parties who use the DRS process. In this regard, we support the report's suggestion that costs be addressed at the end of the process instead of the beginning thereof so as to provide balance and penalize those who abuse it. Currently, cost awards against claimants who have not been successful or who have abused the DRS process are modest and unrealistic and do not reflect the insurer's true legal and other costs incurred in the process. Cost awards need to be realistic. In this regard, we would suggest that the insurer's costs not be limited to legal aid hourly rates where the insurer was successful in the arbitration and there was evidence of abuse of process on the claimant's or their legal representative's part. Further, we would recommend that where a health care provider was the "driving force" in initiating and pursuing mediation and arbitration of a claim which was not substantiated and where there was evidence of abuse of the DRS process on the part of that health care provider, the arbitrator should have the discretion to be able to award costs directly against that health care provider. Desjardins shares Justice Cunningham's concerns with respect to the high contingency fees charged by some legal representatives in relation to accident benefits claims. We suggest the implementation of some controls or limits on contingency fees in relation to such claims. Desjardins disagrees with the introduction of a claimant's advocacy office. This only adds another type of stakeholder into the system where claimants are already overly represented, in any event. We agree with the report's observations that uncertainty and unpredictability are unacceptable to all stakeholders involved in the DRS process. Insurers require certainty in order to set reserves and premiums for the automobile insurance product. Claimants need to know what is or is not covered with respect to their claims for benefits. In this regard, Desjardins does not believe that the introduction of independent medical consultants into the DRS process would contribute to this certainty and predictability. It is our position that the introduction of such medical consultants for the purpose of reviewing files and providing opinions on appropriate treatment would only add another layer of cost and complexity to a process which is already expensive and complex. There are already enough medical experts involved in the process on both sides of the disputes. We do not know what value an additional medical consultant would bring to

3 this process. Furthermore, we are concerned with the independence and neutrality of such medical consultants. As the report points out, how do we find medical consultants who will be considered neutral by all stakeholders? In addition, how do we ensure that arbitrators and judges pay attention to the opinions of these independent medical consultants? Most recently, in the context of the Designated Assessment Centre assessors, their opinions and conclusions were often ignored by arbitrators. One must also bear in mind that many disputes in the system do not deal with medical issues but with the definitions of terms used in the SABS such as "incurred" or what is considered "compelling evidence". The independent medical consultants would be of no use with respect to these issues. We do support the report's observation that there must be a separation of policy and adjudication in the automobile insurance system. In this regard, we reiterate the suggestion which was made in our earlier submission that consideration be given to using the rule making authority provided in the insurance legislation to develop something similar to the Operational Policy Manual which has been created in the context of the Workplace Safety and Insurance Board. We believe that policy should not be made by arbitrators but should be developed by the Superintendent of Insurance, after consultation with relevant stakeholders. We believe that such rules / directives / policy making authority would enhance predictability and certainty for all participants in the accident benefits scheme as they would be binding on claims handlers and DRS decision makers alike. Further, it would provide the Superintendent with the ability to correct "rogue" decisions made by arbitrators or judges which do not reflect the underlying intent of the accident benefits scheme. Desjardins is in general agreement with the recommendations made in this part of the report. We wish to comment on two proposals made by the review. Desjardins strongly disagrees with the granting of direct access to health care providers in relation to disputes involving their services. Our concerns in this regard are as follows: Disputes involving health care providers involve more than a bill collection exercise. The issues at the core of the disputes usually require the direct involvement and participation of the claimant - for example, the claimant's past medical conditions and health or the nature and extent of the injuries which they sustained in the motor vehicle accident. We are concerned that the introduction of a "direct dispute" mechanism for health care providers would relegate the claimant to a secondary, subsidiary role in the dispute process with respect to their own claims for benefit entitlement.

4 Allowing health care providers to take the lead in disputes would require them to assume the roles of treatment provider, expert witness and advocate on behalf of the claimant. The health care provider is placed in a potential conflict of interest in the DRS process as they are forced to perform all three roles during various stages of the dispute. A good example of how this potential conflict of interest could play out in a dispute would start with the fact that the claimant has a finite amount of benefits available for medical and rehabilitation treatment - in a non-mig situation, up to $50,000. Further, these benefits are limited to a 10 year time frame. Suppose, the health care provider is recommending treatment or rehabilitation which will erode a significant amount of those limits in a very short period of time after the accident. Who will look out for the claimant's interests in these situations? Removing the claimant out of the DRS process enhances the opportunity for fraud being perpetrated by unscrupulous health care providers. Presently, in many instances, it is the claimant who provides the insurer's best defence to such practices by confirming or denying the need for the treatment, the extent of treatment received and the cost thereof. Insurers will lose this important preventative tool. Health care providers might abuse the "direct dispute" mechanism by initiating multiple proceedings against the insurer, without the knowledge of the claimant and in the clinic's own self interest. It is Desjardins' firm belief that the claimant must remain an integral part of the DRS process and, more importantly, must play an active role throughout the process, from initiation of the dispute to its conclusion. In short, "it's all about the claimant". The second aspect of the streamlining recommendations which we wish to address concerns the appeal process. Although Desjardins has no particular difficulty with eliminating appeals to the Director's Delegates at FSCOand proceeding to an appeal before a single judge of the Superior Court, we offer the following caveat. We believe that it is critical that the appellate judges be knowledgeable of the Statutory Accident Benefits Schedule, the guidelines and relevant case law. In this regard, we would recommend that a pool of judges with such expertise be established similar to the pool of judges who are available to hear Commercial List matters. A judge who would hear an appeal with respect to either a FSCO arbitration decision or an initial court decision involving an accident benefits dispute would be drawn from such a pool of expert judges. The Interim Report supports extending the one year prohibition on settlements as a way of curbing the counterproductive desire of insurers to close files on a full and final release basis. Desjardins offers qualified support for this proposal; however, we believe that full and final settlement of certain accident benefits in specified circumstances would benefit both insurers and claimants. Our suggestions in this regard consist of one of the following two options:

5 Extend the prohibition on settlements for ~ categories of accident benefits for a period of up to 4 years following the motor vehicle accident. This should act as a deterrent to unscrupulous legal representatives and remove the incentives to them associated with presenting and prolonging unmeritorious claims and disputes. (a) Prohibit settlements of all categories of accident benefits where the claimant has sustained a minor injury; and (b) Allow settlements of accident benefits in relation to non-minor injury claims but only after two years following the motor vehicle accident. We believe that by this point of the claim file, both parties have a better idea of the nature and extent of disability arising from accident-related injuries and would be in a better position to determine future exposure in relation to benefits. It is our submission that providing these qualifiers with respect to the settlement of accident benefits, provides a reasonable balance between the interests of the claimant and the insurer for finality to the claim file. Desjardins supports the report's recommendations with respect to introducing a more evaluative and involved intervention at the initial stages of the dispute. In this regard, we welcome the introduction of a system which would deal with jurisdictional issues and document production problems at the outset. We would like to address the internal review recommendation made in the report. We have no difficulty with the suggestion other than to recommend that the internal review process must be claimant-initiated rather than automatic on every single denial of benefits. If a claimant disagrees with the decision and wishes the insurer to conduct an internal review of the decision, then this request would be accommodated. We are concerned, however, that such a mechanism could be prone to abuse by some claimants through their health care providers or legal representatives as a way of inundating the insurer with multiple successive requests for internal reviews. Desjardins has no particular difficulty with introducing private DRS resources to the system. However, all arbitrators, mediators and other decision makers need to possess the requisite accident benefits expertise and be accountable for their decisions and adherence to any prescribed timelines. In addition, the costs associated with any private DRS resources must be reasonable. Costs associated with the DRS process should be shared by both insurers and claimants.

6 Desjardins offers support with respect to the proposals in relation to the formal internal review process (subject to the comments above), a case manager serving as a "gatekeeper" in relation to jurisdictional and document production issues as well as the assignment of an arbitrator who would arrange a mediation session. We welcome the recommendation that the arbitrator provide a non-binding opinion on likely outcome. We believe that this would assist the parties in finding an early resolution to the dispute. Desjardins also supports the triage role to be performed by this arbitrator in relation to determining whether a paper or in-person hearing is required and dealing with the usual pre-arbitration rulings which may be required by the parties. We reiterate, however, that the timelines set out in the report's recommendations need to be enforced in some fashion. Further, we would recommend that the appeal process, whether from a FSCO arbitration or an initial trial decision, proceed to a single judge of the Superior Court with expertise in accident benefits matters. We look forward to discussing the report and our feedback herein with the review panel on December 10,2013. Ralp D'Angelo Senior Corporate Counsel Property and Casualty Insurance Legal Affairs L,-- ~ Kimberley Tye Claims Legal Counsel Ontario, Atlantic and Western Regions c.c. Kathleen Wynne Premier of Ontario Legislative Building Queen's Park Toronto, Ontario M7A lal by premier@ontario.ca

7 c.c. Insurance Bureau of Canada 777 Bay Street, Suite 2400 P.O. Box 121 Toronto, Ontario MSG 2C8 Attn: Barbara Sulzenko-Laurie Vice-President, Policy and Senior Advisor by c.c. Michael Weisman by c.c. Kenneth Lindhardsen Desjardins General Insurance Group Vice-President, Claims Operations, Ontario, Atlantic and Western Regions by