Loosening the Cap

When the Financial Services Commission of Ontario (FSCO) placed a $2,000 limit on AB assessments under its Minor Injury Guideline (MIG) in September 2010, it intended to restrict a ballooning area of expense for insurers. But now, four months into the reforms, a debate has opened about whether the restriction is in fact too tight.

Both insurers and assessors are openly expressing frustration that the cap is serving as a barrier to treatment and benefits for those with more complex injuries, discriminating against those in rural or under-served areas and creating an uneven playing field in arbitration. Some experts note creative approaches to billing and funding assessments have developed in attempts to circumvent the cap. These approaches fly in the face of the spirit or letter of the regulation, and put insurers at an increased risk of litigation, experts warn.

Issues with the Cap

Karen Rucas, an occupational therapist and member of the Alliance of Community Medical and Rehabilitation Providers, says the $2,000 assessment cap is not needed. She says a number of other changes in FSCO’s auto insurance reform package took assessment costs out of the system. These include:

• the introduction of a new hard cap of $3,500 and the creation of the MIG for patients with soft tissue injuries. Under the MIG, claimants are no longer permitted access to attendant care benefits or assessments or in-home assessments;

• med/rehab assessment costs are now deducted from the new $50,000 benefit limit for non-catastrophic claims (reduced from the previous $100,000 limit); and

• the elimination of housekeeping, home maintenance and caregiving benefits for all non-catastrophic claimants. “This not only eliminates the costs to insurers of paying these benefits, but also eliminates the assessments to determine entitlement to these benefits,” she says.

These three changes alone represent significant savings to insurers, Rucas says. “There was no need for the $2,000 assessment cap too.”

Rucas further contends the benefits serve as a barrier to treatment. “It’s akin to saying to a surgeon who assesses a patient and identifies the need for bypass surgery — a surgery that takes roughly six hours to perform — the surgeon will only be given four hours of operating room time,” she says. People most likely affected by the cap include those with complex injuries, particularly children with mild to moderate brain injuries, or people who have sustained multiple traumas and have been in the system for several years.

This isn’t just an issue for health care providers. Insurers are also struggling with this new, tight set of parameters. Ralph Palumbo, Insurance Bureau of Canada (IBC)’s vice president of Ontario, says the cap has put IBC’s membership “between a rock and a hard place.” The easier or more straightforward assessments can be done for $2,000, he says. “But with the more complex cases, cases requiring assessments by neuropsychologists or pediatric specialists, it is very difficult to find an assessor that can perform an assessment for $2,000.” The cap, he adds, “is really playing havoc with trying to keep the costs reasonable while making sure that people get the care to which they’re entitled.”

In complex or serious cases, a claimant can potentially spend above the cap and then recoup their assessment costs in a tort claim. Insurers, on the other hand, are restricted to the $2,000 cap prescribed in the Statutory Accident Benefit Schedule (SABS). As a result, “the insurance company wouldn’t be able to fight apples-with-apples in arbitration,” observes Kadey B. J. Schultz, an insurer defence lawyer and partner with Hughes Amys LLP. “Insurers would be fighting with a $2,000 report against a report that’s more expensive. In theory, and probably in practice, the person who prepared the more expensive report is likely more experienced and more qualified. You get what you pay for is essentially the principle behind this.”

Palumbo agrees. “If the insurers don’t have a good report or a report that looks at all of the issues in a claim, they get killed at arbitration,” he says. He stresses the need for a level playing field for reports, meaning both claimants and insurers are held rigidly to the cap.

Accessing Health Care

Rucas warns a rigid application of the $2,000 cap will make it extremely difficult to attract specialists to assess patients in the first place. She says this is particularly true of finding experts to determine catastrophic benefits or to address other benefit entitlements such as treatment. In her experience, she has never seen a neuropsychological assessment or an architectural home accessibility assessment performed for less than $4,000. “You’re not going to be able to get a specialist to form an opinion on a complicated case for under $2,000,” she says.

A claimant with a complex file could come with three or four banker’s boxes of material for the assessor to read. Adding in the amount of time it takes to perform the assessment and write a report, the time an assessor spends on a complex case could easily reach the 30-hour mark yet $2,000 does not pay for a specialist to spend this length of time, she says.

In order to conduct some of the more complex assessments for $2,000, a health care professional would have to jeopardize the guidelines its own regulating body has established, Rucas says. “Here’s the unintentional barrier: if the $2,000 fee cap prevents the injured person from getting a comprehensive assessment, then de facto it prevents that person from accessing benefits such as home and vehicle modifications or  treatment.”

Adding insult to injury, an assessor’s travel expenses are included in the $2,000 cap. Schultz warns this discriminates against people living in under-serviced or rural areas. “A person living in South Porcupine or Kenora is not going to have the same access to experts that a person living in a large urban centre would have,” she says. “The flights and possible hotel expenses alone eat up most of that $2,000.”

Schultz adds she thinks it’s only a matter of time before this aspect of the regulation is challenged on constitutional grounds.

Circumnavigating the Cap

The issues noted above appear to have spurred creative billing approaches that essentially circumvent the cap, experts say. One such billing option is called block-fee funding.

Schultz provides a fictitious example of how block fee funding works. She conjures the image of a clinic with a multidisciplinary team of five assessors. Three of them — a chiropractor, physiotherapist and a non-catastrophic occupational therapist, for example — normally charge less than $2,000 each. Let’s say the assessment clinic bills a flat fee of $10,000 for five assessments.

The difference between the cap and those three cheaper assessments are put towards a more expensive expert, like a neuropsychologist, who typically charges $3,500.

“There are a few issues that concern me about this practice,” Schultz says. She points to FSCO’s November 2010 Costs of Assessments and Examinations Guideline. Section 25 (5) (a) of the SABS prohibits an insurer from paying more than $2,000 in total for all fees and expenses for any one assessment or examination. This includes all fees and expenses for preparing and delivering reports in connection with an examination or assessment.

“It might sound naïve, but I like to keep my practice and my advice to my clients quite simple,” Schultz says. “My advice is that the language is pretty clear: you are not to pay more than $2,000 for any assessment or ex amination. I would suggest the idea of paying an assessment company $10,000 for five assessments, but then the assessment company going and paying any of the assessors anything in excess of $2,000, is a breach of the prohibition on an insurer to pay more than $2,000 in total for all fees in relation to an assessment or examination.”

Other sources believe insurers and/or assessment centres could be breaking down complex assessments into component parts — and paying/charging $2,000 (or less) per component. For example, an insurance company might pay an assessment centre $2,000 to read and study a case file, $2,000 to conduct an examination and $2,000 to write the final report. A variation of this strategy is that a claimant suffers from multi-trauma, and assessments are done for each of the injuries — with each assessment coming in under the $2,000 cap.

Palumbo warns these creative billing procedures may potentially run afoul of the spirit and letter of the regulation. Schultz adds an insurer’s file might be produced during claims proceedings up until an application for mediation is filed at FSCO, at the very least. Such files would include insurers’ accounts, retainer letters to assessors, email communications, draft reports and raw test data.

“I think in this post-Sept. 1, 2010 climate we have to accept that the plaintiff’s bar is just as irate about the $2,000 cap as the insurance industry,” Schultz says. “Where the plaintiff’s bar may not have been aggressive in the past in insisting upon the complete production of an insurer’s file, now, just as a procedural compliance issue, they will be asking for everything. I wouldn’t be surprised if some lawyers asked for a copy of the cheque that was issued to the assessor. As case law emerges, and if there is an appropriate case to have a dispute on this issue, I believe the language of the regulation will be interpreted quite rigidly.”

A Solution for the Solution

It seems ironic that within the first quarter of implementation of Ontario’s auto reforms, the industry is already seeking a solution for the proposed solution. “We’re hopeful the government and FSCO will realize this $2,000 cap limit does not fit across the board,” Rucas says. “For many claimants, it’s fine. But for that 1-in-10 file, it can’t be done.”

Some health care professionals are advocating for a graduated cap system. For example, new and additional cap levels might be introduced as a means to introduce nuance between minor and catastrophic determinations, depending on the severity of the injury.

But Palumbo warns this type of scenario would open the door to abuse of the system. “Without disparaging all health care professionals, as long as you have higher benefits available, there will always be practitioners who will try to get their patients bumped up into the higher limits when perhaps it’s not necessary or appropriate to do so. Putting in five more steps, for example, would only create five more opportunities for those types of abuses.”

Instead, Palumbo says he would like to see FSCO draw up clear qualifications for assessors submitting OCF-19 (Application for Determination of Catastrophic Impairment) forms. “We’re seeing a lot of OCF-19s being submitted by general practitioners,” he says. “Once that form is submitted, the insurers really have an obligation to conduct their own examination. If you level the playing field, some assessors may opt out, but not all of them will. It’s part of their income. I think a lot of them will stay in the game. But you have to make sure that for those who stay, they are not only qualified to submit the OCF-19, but those who conduct the cat impairment assessments are actually qualified to do it.”

Palumbo ultimately feels the need to hold the line on the $2,000 cap. “The assessors will either go out of business because they say they won’t do it anymore, or they’ll adapt,” he says. “I suspect it will be the second, but at some point I think the government will have to look at this and ask if it’s losing our best assessors to this, and what it is that we should be doing. ”