Just a bit about myself first, so that you can understand where I’m coming from. I work for a major Ontario Insurance Company. I have worked for a number of years both in the Property Damage (Damage to your car) and Accident Benefits (Injuries) claims departments.
In my time on this forum, I have noticed a lot of questions repeated about claims, the insurance companies, and queries about why insurance companies do/don’t do certain things. I will attempt to answer those questions.
First to establish a few things, I will discuss the two major policies that are used for Auto Insurance in Ontario, the OAP1 and the SABS:
The OAP1 is the Standard Automobile Insurance Policy, written and regulated by the Government of Ontario. All insurance companies use this same policy for all personal use vehicles insured in Ontario.
The SABS or Statutory Accident Benefits Schedule is the policy that covers all injuries resulting from a Motor Vehicle Accident (MVA). This policy is also used by all insurance companies in Ontario, as mandated by Ontario law. The SABS is not only the policy, but is also Legislation (law), and it dictates all rules and benefits available to people injured in an MVA in Ontario. This legislation is controlled, regulated and updated by the Government of Ontario.
That being said, here are some answers to common questions:
Property Damage:
Q: Why is it that when I get a quote for repairs from a body shop, they give me a low price, but when I say that I’m going to go through insurance, they give me a much higher price? Why do the insurance companies let themselves get screwed by body shops/tow companies?
A: The short answer is that they aren’t getting screwed. Truly, there is a good explanation for this. Insurance companies have a highly constructed and planned method for getting the best value for repairs. A common misconception is that Insurance companies pay whatever a shop quotes for repairs. This rarely (if ever) happens. There are typically two scenarios about how damage is estimated.
1) Preferred body shops: If the insurance company has preferred shops, people at those shops are authorized to write estimates, using the estimating software/guidelines/prices provided by the insurance companies. They complete repairs based on the Insurance companies’ guidelines and specifications for quality/speed/cost. They are paid at market price for labour and labour times are quoted based on industry standard (i.e. Mitchell Guide). They obtain their parts from part dealers/networks specified by the insurance companies who have an agreement to provide parts at fair market prices. These shops and part suppliers do not overcharge. Their prices are frequently checked, and they are often in daily/hourly contact with the insurance company. Overcharging would be equivalent to ‘biting the hand that feeds’ and they could potentially lose a massive contract and go out of business by doing so.
2) Other body shops: If the customer prefers their car be fixed at a non-preferred shop (often because they want work done by a place they know/have been to in the past or their dealership), they may write an estimate, but the insurance company will not follow that. The Insurance Company will send their own estimator to see the vehicle/perform a tear down if necessary, and create an estimate using fair market prices for labour and parts, again following repair industry guidelines for labour estimating. They will provide that estimate to the shop, who will complete the repairs specified in the estimate for the price estimated. Vehicles are often re-inspected after the repairs are completed to make sure that the shop did not cut any corners, before they are paid for the repairs. If the shop refuses to complete the repairs for the price estimated, (i.e. they want to charge more because they don’t think they can make money off the repair for the price), the customer would then be asked to pay the difference between what the shop wants to charge, and the insurance estimate, or they can take their vehicle elsewhere for repair, as there many other shops who would gladly complete the repair based on the insurance estimate. This rarely happens however, as the price estimated is usually fair, and the shop doesn’t push away business.
As you can see, the cost of repairs is very closely watched, from the repairs required, the price of parts, and the price and amount of labour required to complete a repair. There is another major part to this however. You may wonder why the price is still much higher. This is due to the way the repair is completed. Insurance companies complete repairs to a certain quality using certain parts, often due to past legal decisions where people have fought over the quality of repair completed. That being said, there is a difference in price between an insurance and non insurance quote for a reason. Let’s examine two cases:
1) You damage your car by backing into a post and want to repair it yourself. You go to your local body shop for a quote. The body shop will quote you a new rear bumper that is an aftermarket, Chinese-made part, which costs $250, and will charge another $200 to prep/paint that bumper.
Total quote: $450 for Materials + $300 for Labour = $750.00 price for repair.
2) You damage your car by backing into a post and want to have it repaired through insurance. The Insurance Company specifies that work must uphold a certain standard for workmanship, part quality and repair integrity. The insurance company sends an estimator who provides a quote: Replace bumper with used OEM Bumper of equal condition or better $275.00 (Because they are of better quality/fit than aftermarket bumper). $200 to prep/paint that bumper, then $500 to prep/paint/blend the surrounding body panels so that it blends perfectly and doesn’t look odd. Then, reapplying any rust proofing/corrosion protection to all parts that were touched / repaired, $100.
Total quote: $1075 for materials + $500 for Labour = $1575.00 price for repair.
Example 2 gives you a much better quality repair, which the insurance company is obligated to pay for, as anything less would not indemnify your loss. The paint matches, (have you ever looked at a car and sworn that that one panel just doesn’t look the same?) you get better quality parts that don't rust out after 2 years, and your car will be restored to as good as it was prior to the accident. Your insurance company tries to restore your car closer to pre-accident condition than the typical "cheap as possible" body shop quote. If they didn't repair it that well, you'd end up complaining and they would have to pay to do it all over again. That is a minor fix and already you can see that the insurance quote is already double the amount. Insurance companies only pay the best rate for repairs and parts, shops do not get away with charging extra or trying to gouge the companies. Adjusters will see every estimate before repairs are authorized, and are trained to make sure that all the repairs that are being completed are necessary, and that the price being charged is no more than market value. Repair times are aligned with body shop industry standards using systems such as the Mitchell Estimating System for repair times, just like many mechanics do.
Accident Benefits:
Q: How come insurance companies allow doctors/dentists/chiropractors etc. charge more for services when they are billing for treatment following an MVA?
A: Again, the insurance companies aren’t just allowing this to happen. Everything that is billed is done so in accordance with the SABS, following what’s called the “Professional Service Guidelines” or PSGs, which are provided by the Financial Services Commission of Ontario (FSCO). FSCO provides yearly updates to the PSGs, and all insurance companies are required to follow these guidelines. These guidelines specify everything. For example, they specify how much each type of medical provider can charge per hour (i.e. Chiropractor is allowed to charge $104.02 per hour for non-catastrophic injuries. They are allowed to charge $63.72 for every form that they fill out to submit to the insurance company. The medical provider is allowed to charge up to the maximum amount specified in the PSG, however if they charge more, the insurance company does not (and often will not) pay above and beyond the amount specified in the PSGs. As you can see, Ontario law dictates how much medical providers are allowed to charge, and the insurance companies must pay that amount, but nothing more.
Q: How is it that a person with a soft tissue injury can end up with a $90,000 Accident Benefit Claim?
A: The unfortunate answer is that the current legislation (SABS), allows for misuse and abuse of the benefits offered by insurers in Ontario. Here are two typical examples of a whiplash type injury claim. Note that to be able to sue the at-fault party in Ontario for pain and suffering etc., you must pass a threshold of having a permanent, serious or important disfigurement or impairment as a result of the accident. If you do not pass this threshold, you are not allowed to sue.
1) A person who lives in Northern Ontario driving a 2005 Honda Accord is rear-ended while stopped at a traffic light. There is $2000 worth of damage to the Honda. The person reports their claim to their insurance company, then fills out the appropriate paperwork and deals directly with their Accident Benefits Adjuster. The person goes to his family doctor and is diagnosed with Whiplash, Grade 2. He feels headaches that are common to this type of injury; however they go away after a few days. He is referred to a physiotherapist, who treats him 2 times a week for 8 weeks until his symptoms resolve and he is better. During this time he continues to work full time at his job, only missing 2 days which he takes as sick days. His doctor bills OHIP for 1 hour of time to complete the examination and referral for physiotherapy. The physiotherapist bills the insurance company $80 per 1 hour x 16 session totaling $1280. Total claim cost: $1280.
2) A person who lives in North York, Ontario driving a 2005 Honda Accord is rear-ended while stopped at a traffic light. There is $2000 worth of damage to the Honda. The person reports their claim then calls a personal injury lawyer that they heard an advertisement for on the radio. The personal injury lawyer advises them that to be able to sue, they need to prove that they are suffering from either permanent, serious or important disfigurement or impairment, and that they will make sure that they have all of their limitations assessed to help build their case. The lawyer then directs that person to visit a doctor who they know will give an inflated diagnosis, who assesses the person and states that they have Whiplash, Grade 3 injury, with cervicogenic headaches, depressed mood and irritability, Lumbar, thoracic and cervical spine sprain and strain, and dizziness, and completes a disability certificate stating that due to his injuries, he is not able to work or complete his housekeeping duties. A referral is made to have an in-home assessment completed to determine how much assistance that person needs to complete personal care and housekeeping tasks. That assessment is completed and because of pain due to the injury it is recommended that that person receive $1500/month in personal care assistance and $100/week in housekeeping assistance. That person does not return to work, and their income replacement benefit is calculated to be $400/week. They are then referred to a chiropractor who recommends that that person receive treatment 3 times a week for 15 weeks and massage therapy 3 times a week for 10 weeks. They are also referred to an assessment by a neurologist, to check into the headaches and a psychologist to assess their psychological issues. The neurological assessment could be covered under OHIP, but an appointment would take 4 months to get, however if the insurance company pays for it, it could be completed in a week. The neurological assessment is completed determining that that person is suffering from headaches that will resolve. The psychological assessment is completed and the person is diagnosed with mixed anxiety disorder with depressed mood, and 12 sessions of psycho-therapy are recommended to resolve the person’s psychological impairment. 6 months down the road, the treatment continues and no symptoms are resolving. The client then is sent back to that original doctor who declares that that person is suffering from “Chronic Pain” and a chronic pain assessment is recommended. Following completion of that assessment, the person is recommended for a treatment regimen completed by a variety of doctors/psychologists etc, and yet after 6 more months, the symptoms have not resolved. At the one year mark (the minimum amount that a person must wait before being able to settle an Accident Benefits Claim), the lawyer contacts the insurance adjuster and offers to settle the file for $50,000, including money for future treatment, income replacement, housekeeping and personal care assistance. After dealing and haggling with the adjuster, the file ends up settling for $15,000. The adjuster reluctantly agrees with this price as he is certain that the claim may end up costing more than that should he not settle.
The cost of this claim is as follows:
$20800.00 - 1 year of income replacement at $400/wk
$5200.00 - 1 year of housekeeping assistance at $100/wk
$18000.00 - 1 year of personal care assistance at $1500/month
$200.00 - for the initial Doctor appointment,
$63.72 - to complete the Disability Certificate
$263.72 - Chiropractor charges the $200 to complete the initial assessment for chiro and $63.72 to complete the forms.
$7500.00 - Cost of continued Chiropractic and Massage treatments over 6 month period
$1800.00 - Cost to complete the in-home assessment
$2500.00 - Cost to complete the neurological assessment
$2500.00 - Cost to complete the psychological assessment
$263.72 - Cost to complete the pre-psychological assessment screening interview and fill out the Application for Approval of Assessment for psych assessment.
$63.72 - Cost to fill out the Treatment Plan for Psych.
$2200.00 - Cost to complete the psychological treatment
$4500.00 - Cost of the Chronic Pain Assessment
$6563.72 - Cost of the Chronic Pain treatment plan/completion of form.
Total cost of claim prior to settlement: $79618.60 + Settlement $15000 = $94,618.6
Q: That’s freaking crazy! How does the company let them get away with that??
A: The sad truth is that there is little that the company can do to curb this abuse. Here is an example:
From the above example, the adjuster sees that the medical evidence on file does not seem to support that the person suffers a continued disability from work after 5 months, and wants to see if that benefit could be stopped. In order to do so, the insurance company must request that the claimant go to their doctor and get an updated disability certificate. Once that is received, if it continues to support disability despite the lack of medical evidence, the adjuster can then request that that person attend and Independent Medical Examination (IME) at the insurer’s cost to assess that person’s disability. That person could then fail to attend the assessments, and request that they be rescheduled for a few months, to avoid attending for quite some time. Finally they actually show up, after the insurer has paid thousands of dollars in continued benefits (because they cannot be stopped if they continue to request a re-schedule), and hundreds of dollars in fees for missed appointments. As the medical evidence suggests a physical and psychological impairment, that person must attend a physical assessment, often completed by an Othopaedic Specialist or Physiatrist,. Then they must complete a psychological assessment. They must also complete a Functional Abilities Evaluation. The total cost of these assessments is approx $6500.00. After attending all three assessments, the doctors all state that this person is not impaired. The insurance adjuster uses these recommendations to stop paying the income replacement benefit. The benefit is stopped and the claimant is notified. They then have the option for rebuttals. For each report, they are able to attend an appointment with an equivalent doctor of their own choosing, and have that doctor submit a report in their favour for the insurance company to reconsider. The insurer pays for these at a cost for $2450. The insurance adjuster must send those reports back to the IME doctors, and they complete addendum reports, at an additional cost of $1500.00. At this point, if they still say that the claimant is not disabled, the benefit remains stopped. From here, the claimant has the option to dispute the insurer’s decision, and file for mediation with FSCO. The mediation is paid for by the Insurer at a cost for $5000.00. The insurance company refuses to reinstate the benefit because of the supporting medical evidence, and the mediation fails. The claimant then files for arbitration with FSCO, or sues the insurer for denying benefits. This results in a court case at which time the insurance company has to hire a lawyer to fight for them in court. At the end of the day, the judge or arbitrator pushes both parties to come to some sort of settlement, and to avoid a lengthy trial and court costs, the insurer ends up agreeing to pay for another 6 months of Income Replacement, even though the medical evidence shows that person is clearly better and able to return to work. The insurer has to pay their lawyer $10,000 for their work, and pay the cost of the arbitration, an additional $5000.
At the end of the day, the insurance company has paid out $30,400 and agreed to pay $10400.00 more to avoid additional payments. All to stop someone who does not deserve a benefit from receiving that benefit.
This is a common scenario, and often takes place over the denial of anything in a claim, from benefits to treatment, to assessments. The laws require that the insurers first gain medical evidence to support a denial, then gives the claimant the opportunity to medically appeal, then mediate the denial, then arbitrate or litigate. Often it is just more cost effective to approve and continue to pay rather than fight, stop or attempt to deny a benefit. This has allowed the people abusing the system even more leeway.
Q: What about Fraud? Why are these people not stopped? Are there no penalties for this?
A: The above examples would not constitute insurance fraud. They have evidence to support their case provided by licensed medical providers, no matter how crooked they are, or how far they bend the truth. For those who insurers catch committing actual fraud, there is little that can be done other than to deny benefits, follow the whole process listed above, and then win the eventual court case using the evidence gathered about the fraud, and that is it. There is no further recourse. Unfortunately, due to privacy laws in Ontario, the Insurance companies are not allowed to disclose any information related to a claim to the authorities. They cannot prosecute people who are caught committing fraud, nor can they provide supporting evidence to the authorities that investigate fraudulent claims. Therefore, people who get a claim denied due to fraud often get away without punishment, other than losing benefits that they were not entitled too anyways.
In my time on this forum, I have noticed a lot of questions repeated about claims, the insurance companies, and queries about why insurance companies do/don’t do certain things. I will attempt to answer those questions.
First to establish a few things, I will discuss the two major policies that are used for Auto Insurance in Ontario, the OAP1 and the SABS:
The OAP1 is the Standard Automobile Insurance Policy, written and regulated by the Government of Ontario. All insurance companies use this same policy for all personal use vehicles insured in Ontario.
The SABS or Statutory Accident Benefits Schedule is the policy that covers all injuries resulting from a Motor Vehicle Accident (MVA). This policy is also used by all insurance companies in Ontario, as mandated by Ontario law. The SABS is not only the policy, but is also Legislation (law), and it dictates all rules and benefits available to people injured in an MVA in Ontario. This legislation is controlled, regulated and updated by the Government of Ontario.
That being said, here are some answers to common questions:
Property Damage:
Q: Why is it that when I get a quote for repairs from a body shop, they give me a low price, but when I say that I’m going to go through insurance, they give me a much higher price? Why do the insurance companies let themselves get screwed by body shops/tow companies?
A: The short answer is that they aren’t getting screwed. Truly, there is a good explanation for this. Insurance companies have a highly constructed and planned method for getting the best value for repairs. A common misconception is that Insurance companies pay whatever a shop quotes for repairs. This rarely (if ever) happens. There are typically two scenarios about how damage is estimated.
1) Preferred body shops: If the insurance company has preferred shops, people at those shops are authorized to write estimates, using the estimating software/guidelines/prices provided by the insurance companies. They complete repairs based on the Insurance companies’ guidelines and specifications for quality/speed/cost. They are paid at market price for labour and labour times are quoted based on industry standard (i.e. Mitchell Guide). They obtain their parts from part dealers/networks specified by the insurance companies who have an agreement to provide parts at fair market prices. These shops and part suppliers do not overcharge. Their prices are frequently checked, and they are often in daily/hourly contact with the insurance company. Overcharging would be equivalent to ‘biting the hand that feeds’ and they could potentially lose a massive contract and go out of business by doing so.
2) Other body shops: If the customer prefers their car be fixed at a non-preferred shop (often because they want work done by a place they know/have been to in the past or their dealership), they may write an estimate, but the insurance company will not follow that. The Insurance Company will send their own estimator to see the vehicle/perform a tear down if necessary, and create an estimate using fair market prices for labour and parts, again following repair industry guidelines for labour estimating. They will provide that estimate to the shop, who will complete the repairs specified in the estimate for the price estimated. Vehicles are often re-inspected after the repairs are completed to make sure that the shop did not cut any corners, before they are paid for the repairs. If the shop refuses to complete the repairs for the price estimated, (i.e. they want to charge more because they don’t think they can make money off the repair for the price), the customer would then be asked to pay the difference between what the shop wants to charge, and the insurance estimate, or they can take their vehicle elsewhere for repair, as there many other shops who would gladly complete the repair based on the insurance estimate. This rarely happens however, as the price estimated is usually fair, and the shop doesn’t push away business.
As you can see, the cost of repairs is very closely watched, from the repairs required, the price of parts, and the price and amount of labour required to complete a repair. There is another major part to this however. You may wonder why the price is still much higher. This is due to the way the repair is completed. Insurance companies complete repairs to a certain quality using certain parts, often due to past legal decisions where people have fought over the quality of repair completed. That being said, there is a difference in price between an insurance and non insurance quote for a reason. Let’s examine two cases:
1) You damage your car by backing into a post and want to repair it yourself. You go to your local body shop for a quote. The body shop will quote you a new rear bumper that is an aftermarket, Chinese-made part, which costs $250, and will charge another $200 to prep/paint that bumper.
Total quote: $450 for Materials + $300 for Labour = $750.00 price for repair.
2) You damage your car by backing into a post and want to have it repaired through insurance. The Insurance Company specifies that work must uphold a certain standard for workmanship, part quality and repair integrity. The insurance company sends an estimator who provides a quote: Replace bumper with used OEM Bumper of equal condition or better $275.00 (Because they are of better quality/fit than aftermarket bumper). $200 to prep/paint that bumper, then $500 to prep/paint/blend the surrounding body panels so that it blends perfectly and doesn’t look odd. Then, reapplying any rust proofing/corrosion protection to all parts that were touched / repaired, $100.
Total quote: $1075 for materials + $500 for Labour = $1575.00 price for repair.
Example 2 gives you a much better quality repair, which the insurance company is obligated to pay for, as anything less would not indemnify your loss. The paint matches, (have you ever looked at a car and sworn that that one panel just doesn’t look the same?) you get better quality parts that don't rust out after 2 years, and your car will be restored to as good as it was prior to the accident. Your insurance company tries to restore your car closer to pre-accident condition than the typical "cheap as possible" body shop quote. If they didn't repair it that well, you'd end up complaining and they would have to pay to do it all over again. That is a minor fix and already you can see that the insurance quote is already double the amount. Insurance companies only pay the best rate for repairs and parts, shops do not get away with charging extra or trying to gouge the companies. Adjusters will see every estimate before repairs are authorized, and are trained to make sure that all the repairs that are being completed are necessary, and that the price being charged is no more than market value. Repair times are aligned with body shop industry standards using systems such as the Mitchell Estimating System for repair times, just like many mechanics do.
Accident Benefits:
Q: How come insurance companies allow doctors/dentists/chiropractors etc. charge more for services when they are billing for treatment following an MVA?
A: Again, the insurance companies aren’t just allowing this to happen. Everything that is billed is done so in accordance with the SABS, following what’s called the “Professional Service Guidelines” or PSGs, which are provided by the Financial Services Commission of Ontario (FSCO). FSCO provides yearly updates to the PSGs, and all insurance companies are required to follow these guidelines. These guidelines specify everything. For example, they specify how much each type of medical provider can charge per hour (i.e. Chiropractor is allowed to charge $104.02 per hour for non-catastrophic injuries. They are allowed to charge $63.72 for every form that they fill out to submit to the insurance company. The medical provider is allowed to charge up to the maximum amount specified in the PSG, however if they charge more, the insurance company does not (and often will not) pay above and beyond the amount specified in the PSGs. As you can see, Ontario law dictates how much medical providers are allowed to charge, and the insurance companies must pay that amount, but nothing more.
Q: How is it that a person with a soft tissue injury can end up with a $90,000 Accident Benefit Claim?
A: The unfortunate answer is that the current legislation (SABS), allows for misuse and abuse of the benefits offered by insurers in Ontario. Here are two typical examples of a whiplash type injury claim. Note that to be able to sue the at-fault party in Ontario for pain and suffering etc., you must pass a threshold of having a permanent, serious or important disfigurement or impairment as a result of the accident. If you do not pass this threshold, you are not allowed to sue.
1) A person who lives in Northern Ontario driving a 2005 Honda Accord is rear-ended while stopped at a traffic light. There is $2000 worth of damage to the Honda. The person reports their claim to their insurance company, then fills out the appropriate paperwork and deals directly with their Accident Benefits Adjuster. The person goes to his family doctor and is diagnosed with Whiplash, Grade 2. He feels headaches that are common to this type of injury; however they go away after a few days. He is referred to a physiotherapist, who treats him 2 times a week for 8 weeks until his symptoms resolve and he is better. During this time he continues to work full time at his job, only missing 2 days which he takes as sick days. His doctor bills OHIP for 1 hour of time to complete the examination and referral for physiotherapy. The physiotherapist bills the insurance company $80 per 1 hour x 16 session totaling $1280. Total claim cost: $1280.
2) A person who lives in North York, Ontario driving a 2005 Honda Accord is rear-ended while stopped at a traffic light. There is $2000 worth of damage to the Honda. The person reports their claim then calls a personal injury lawyer that they heard an advertisement for on the radio. The personal injury lawyer advises them that to be able to sue, they need to prove that they are suffering from either permanent, serious or important disfigurement or impairment, and that they will make sure that they have all of their limitations assessed to help build their case. The lawyer then directs that person to visit a doctor who they know will give an inflated diagnosis, who assesses the person and states that they have Whiplash, Grade 3 injury, with cervicogenic headaches, depressed mood and irritability, Lumbar, thoracic and cervical spine sprain and strain, and dizziness, and completes a disability certificate stating that due to his injuries, he is not able to work or complete his housekeeping duties. A referral is made to have an in-home assessment completed to determine how much assistance that person needs to complete personal care and housekeeping tasks. That assessment is completed and because of pain due to the injury it is recommended that that person receive $1500/month in personal care assistance and $100/week in housekeeping assistance. That person does not return to work, and their income replacement benefit is calculated to be $400/week. They are then referred to a chiropractor who recommends that that person receive treatment 3 times a week for 15 weeks and massage therapy 3 times a week for 10 weeks. They are also referred to an assessment by a neurologist, to check into the headaches and a psychologist to assess their psychological issues. The neurological assessment could be covered under OHIP, but an appointment would take 4 months to get, however if the insurance company pays for it, it could be completed in a week. The neurological assessment is completed determining that that person is suffering from headaches that will resolve. The psychological assessment is completed and the person is diagnosed with mixed anxiety disorder with depressed mood, and 12 sessions of psycho-therapy are recommended to resolve the person’s psychological impairment. 6 months down the road, the treatment continues and no symptoms are resolving. The client then is sent back to that original doctor who declares that that person is suffering from “Chronic Pain” and a chronic pain assessment is recommended. Following completion of that assessment, the person is recommended for a treatment regimen completed by a variety of doctors/psychologists etc, and yet after 6 more months, the symptoms have not resolved. At the one year mark (the minimum amount that a person must wait before being able to settle an Accident Benefits Claim), the lawyer contacts the insurance adjuster and offers to settle the file for $50,000, including money for future treatment, income replacement, housekeeping and personal care assistance. After dealing and haggling with the adjuster, the file ends up settling for $15,000. The adjuster reluctantly agrees with this price as he is certain that the claim may end up costing more than that should he not settle.
The cost of this claim is as follows:
$20800.00 - 1 year of income replacement at $400/wk
$5200.00 - 1 year of housekeeping assistance at $100/wk
$18000.00 - 1 year of personal care assistance at $1500/month
$200.00 - for the initial Doctor appointment,
$63.72 - to complete the Disability Certificate
$263.72 - Chiropractor charges the $200 to complete the initial assessment for chiro and $63.72 to complete the forms.
$7500.00 - Cost of continued Chiropractic and Massage treatments over 6 month period
$1800.00 - Cost to complete the in-home assessment
$2500.00 - Cost to complete the neurological assessment
$2500.00 - Cost to complete the psychological assessment
$263.72 - Cost to complete the pre-psychological assessment screening interview and fill out the Application for Approval of Assessment for psych assessment.
$63.72 - Cost to fill out the Treatment Plan for Psych.
$2200.00 - Cost to complete the psychological treatment
$4500.00 - Cost of the Chronic Pain Assessment
$6563.72 - Cost of the Chronic Pain treatment plan/completion of form.
Total cost of claim prior to settlement: $79618.60 + Settlement $15000 = $94,618.6
Q: That’s freaking crazy! How does the company let them get away with that??
A: The sad truth is that there is little that the company can do to curb this abuse. Here is an example:
From the above example, the adjuster sees that the medical evidence on file does not seem to support that the person suffers a continued disability from work after 5 months, and wants to see if that benefit could be stopped. In order to do so, the insurance company must request that the claimant go to their doctor and get an updated disability certificate. Once that is received, if it continues to support disability despite the lack of medical evidence, the adjuster can then request that that person attend and Independent Medical Examination (IME) at the insurer’s cost to assess that person’s disability. That person could then fail to attend the assessments, and request that they be rescheduled for a few months, to avoid attending for quite some time. Finally they actually show up, after the insurer has paid thousands of dollars in continued benefits (because they cannot be stopped if they continue to request a re-schedule), and hundreds of dollars in fees for missed appointments. As the medical evidence suggests a physical and psychological impairment, that person must attend a physical assessment, often completed by an Othopaedic Specialist or Physiatrist,. Then they must complete a psychological assessment. They must also complete a Functional Abilities Evaluation. The total cost of these assessments is approx $6500.00. After attending all three assessments, the doctors all state that this person is not impaired. The insurance adjuster uses these recommendations to stop paying the income replacement benefit. The benefit is stopped and the claimant is notified. They then have the option for rebuttals. For each report, they are able to attend an appointment with an equivalent doctor of their own choosing, and have that doctor submit a report in their favour for the insurance company to reconsider. The insurer pays for these at a cost for $2450. The insurance adjuster must send those reports back to the IME doctors, and they complete addendum reports, at an additional cost of $1500.00. At this point, if they still say that the claimant is not disabled, the benefit remains stopped. From here, the claimant has the option to dispute the insurer’s decision, and file for mediation with FSCO. The mediation is paid for by the Insurer at a cost for $5000.00. The insurance company refuses to reinstate the benefit because of the supporting medical evidence, and the mediation fails. The claimant then files for arbitration with FSCO, or sues the insurer for denying benefits. This results in a court case at which time the insurance company has to hire a lawyer to fight for them in court. At the end of the day, the judge or arbitrator pushes both parties to come to some sort of settlement, and to avoid a lengthy trial and court costs, the insurer ends up agreeing to pay for another 6 months of Income Replacement, even though the medical evidence shows that person is clearly better and able to return to work. The insurer has to pay their lawyer $10,000 for their work, and pay the cost of the arbitration, an additional $5000.
At the end of the day, the insurance company has paid out $30,400 and agreed to pay $10400.00 more to avoid additional payments. All to stop someone who does not deserve a benefit from receiving that benefit.
This is a common scenario, and often takes place over the denial of anything in a claim, from benefits to treatment, to assessments. The laws require that the insurers first gain medical evidence to support a denial, then gives the claimant the opportunity to medically appeal, then mediate the denial, then arbitrate or litigate. Often it is just more cost effective to approve and continue to pay rather than fight, stop or attempt to deny a benefit. This has allowed the people abusing the system even more leeway.
Q: What about Fraud? Why are these people not stopped? Are there no penalties for this?
A: The above examples would not constitute insurance fraud. They have evidence to support their case provided by licensed medical providers, no matter how crooked they are, or how far they bend the truth. For those who insurers catch committing actual fraud, there is little that can be done other than to deny benefits, follow the whole process listed above, and then win the eventual court case using the evidence gathered about the fraud, and that is it. There is no further recourse. Unfortunately, due to privacy laws in Ontario, the Insurance companies are not allowed to disclose any information related to a claim to the authorities. They cannot prosecute people who are caught committing fraud, nor can they provide supporting evidence to the authorities that investigate fraudulent claims. Therefore, people who get a claim denied due to fraud often get away without punishment, other than losing benefits that they were not entitled too anyways.
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