Punitive financial consequences for insurance companies only way to solve delay long-term
This article was produced in partnership with Thomson Rogers Lawyers.
Mallory Hendry of Canadian Lawyer sat down with Darcy Merkur, trauma lawyer and partner at Thomson Rogers Lawyers, to delve into the delay facing his clients and what can be done about it.
As we make our way through the first month of a new year, it’s very much the same old story at the Licence Appeal Tribunal.
“I can’t stand having to tell a client they’ve been wronged by the insurer and my recourse is to get in line and have it righted a year and a half from now, or maybe longer, at considerable expense to them due to the no cost-recovery system,” says Darcy Merkur, trauma lawyer and partner at Thomson Rogers Lawyers. “The lineup keeps getting longer, the delays more frequent and accident victims have no access to benefits.”
The Ontario Trial Lawyers Association recently published an article on its blog outlining statistics on the LAT from ongoing Freedom of Information requests, and the numbers tell a grim story. Since the LAT started hearing accident benefit disputes, the time from application to decision has almost doubled, to 589 days in 2021-22 Q4 from 323 days in 2017-18 Q4, and the average time between each litigation step — application, cases conference, hearing — has also increased over the last year. Applications continue to climb, with an average of 4,000 per quarter in the last 12 months.
Some argue the COVID-19 pandemic interfered, but Merkur says the efficiencies the profession developed to advance issues virtually should have had the opposite impact on the LAT’s case load. Doing things virtually saves time and expense — you should be able to get on on short notice, with no transportation problems or wheelchair accessible room issues for example, and back-to-back hearings via Zoom can be done far more easily than in person. The lineup should be getting shorter not longer, but that’s not borne out by the statistics.
Ultimately, the timeline for justice by LAT dispute — or tort claim, for that matter Merkur notes — is far too long and poses major challenges to accident victims. The no-fault system was designed to provide immediate access to crucial benefits to help with treatment and care, and because of these delays insurers are empowered “to put up road blocks, to dig in, to deny and there’s virtually no recourse.”
“It takes a year or two to have a dispute addressed and there’s no cost consequences to the insurer — they don’t have to pay any more, the punitive interest was taken away and there’s no cost recovery,” Merkur says. “Insurers are starting to realize their best option is to deny, and the number of disputes — which relates to the number of denials — and the timeline to have hearings addressed are on the rise because of what I view as a conscious effort by the insurance companies.”
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The two big issues in dispute at the LAT are weekly benefits — primarily income replacement benefits — and catastrophic designations, which are crucial issues. Income replacement benefits disputes look at whether the person who was injured should continue to receive weekly income replacement benefits on the basis that they can’t work. Insurers dig in at the two-year mark because the legal test changes to whether the person can go back to any suitable job as opposed to their old job specifically, and will cut off benefits while that’s decided. But that means a lengthy dispute process that leaves Merkur’s client with no money coming in. Even if they ultimately win, the insurer doesn’t have to pay anything extra — but the client had to pay the unrecoverable costs to have experts testify on their behalf.
When it comes to the catastrophic debate, the test was adjusted from a simplified cookie cutter test to a complex analysis test based on time, with multiple tests done over a two-year period. It’s a moving target, it’s super expensive and it takes forever to get a result, Merkur says, and in the meantime the person is waiting to see if they have $1M in benefits available or $65,000 which runs out quickly.
The article goes on to say that on a positive note, the LAT met with the OTLA in December to discuss ongoing efforts to improve the situation. But while the suggestions discussed — hiring more adjudicators, focused efforts to eliminate backlogs and potentially reforming procedures to streamline the process — are all good initiatives, they never work, Merkur says.
“At most, they provide a temporary bandaid to address an immediate crisis before the crisis goes back to where it was. They can hire a couple dozen more adjudicators, things will speed up for a couple months but it’s just opening up a new check-out counter. The line ups will continue — it doesn’t solve the problem.”
If you want to solve the issues with the dispute process, Merkur says, it comes down to deterrence. Substantial penalties for bad conduct and inappropriate denials are the only way to change the approach of the insurance companies, namely a punitive compound interest rate as was the case before 2010 and more prominent special awards which are currently too few and far between.
Most importantly, Merkur advocates for cost consequences. Tell insurers if they lose, they’ll have to pay 100% of the plaintiff’s disbursements and legal costs “and I guarantee you they stop taking outrageous positions because the financial consequences would force them to act reasonably.”
“If they have a defensible position, they wouldn’t mind that risk. But they notoriously know they’re going to lose, they just don’t care — they can afford it.”
As a trauma lawyer, Darcy Merkur handles a multitude of complex, serious personal injury cases on behalf of accident victims and their families. He’s built a reputation as an innovator in the field and passionately supports the rights of accident victims. Through his previous involvement with the Brain Injury Society of Toronto and the Brain Injury Awareness Month planning committee, he helps raise public awareness of the difficulties faced by head injury victims.