Back to the Future

Future care cost reports are a familiar part of the insurance claims landscape for adjusters dealing with claimants seriously injured in car accidents. Everything from attendant care to housekeeping services to assistance devices must be factored in to achieve a reasonable projection of ongoing costs. But some question the value of these reports – and the lack of standards for health providers who issue them.

Here are some questions that most people don’t want to consider. If you were in a serious car accident and severely fractured both your ankles, how long would it take you to regain any semblance of independence? Let’s say an infection post-surgery further complicated the process, leaving you unable to stand for longer than 10 minutes at a time. How much physiotherapy would you require five or 10 years later? How would you get to your family reunion or son’s hockey game? What housekeeping services would you require?

Rather than shy away from these questions, insurance adjusters, lawyers and health care professionals must address these issues head-on and determine as accurately as possible the future care needs of seriously injured individuals.

FUTURE CARE COST REPORTS

One of the main tools to achieve this is a future care cost report or analysis. This report, often provided by occupational therapists, nurses or rehabilitation management firms, attempts to set out what a seriously injured person requires in terms of medical care and non-medical assistance over a prescribed time period. In auto insurance, it’s a process that can be adversarial and speculative, with contradictory estimates coming from various health care experts.

A 2003 auto insurance study done by the Insurance Bureau of Canada, which looked at private sector auto insurance, shows that roughly 15-20% of injuries suffered in auto accidents are considered serious impairments. While the vast majority of claims on the frequency side are for minor, soft-tissue injuries, these more serious impairments play a key role in severity. The longer tail of the serious injury often means limits are exhausted and reserves have to be set, creating long-term financial implications for insurance companies.

Not all of these serious injuries are “catastrophic.” Provincial regulations detail clear and stringent definitions for what types of injuries qualify as catastrophic impairment. In the sometimes coldly analytic world of suffering, percentages are assigned based on severity of injury to determine “whole-body impairment.”

Cases that are not catastrophic, but still serious often generate the most future care controversy. In particular, with Bill 198 in Ontario, not-at-fault claimants with injuries that meet a verbal threshold of serious injury can now sue in a tort claim for excess past and future health care expenses. Even if a person is not considered “catastrophically impaired,” he or she can still recover expenses above the limits set out in the statutory accident benefits schedule (SABS).

Teresa Riverso, an occupational therapist and president of Supportive Environments Inc., is active in future care cost reports. “Insurers are becoming more aware of future care costs because in a lot of cases they end up going to tort,” she says. “It is not just a matter of the accident benefits side of things. When people feel they may be shortchanged, they get a lawyer right from the beginning. That is becoming more commonplace than not.”

SPECULATIVE DAMAGES

The process of settling injury claims in private sector auto provinces such as Ontario does not necessarily make it easier to come to a valid determination of future care. Regulations for tort versus SABS claims, an adversarial legal system and ongoing debates about cost projections can confuse the claims adjuster, who is neither a legal nor medical expert.

“Future care cost is the most speculative aspect of damages for a couple of reasons,” notes Michael Huclack, a lawyer with Aronovitch Macaulay Rollo LLP in Toronto. “You are trying to project into the future, which is a difficult task subject to great variance. Secondly, you are trying to quantify the daily tasks of living: How much is it worth to clean your bathroom? How much is it worth for you to brush your teeth? That is subject to a lot of interpretation and differing points of view.”

“There is a strong reliance on professional expertise of the report provider,” notes Mariette St. Pierre, a consultant to the insurance industry who has worked in accident benefits and bodily injury claims for more than 10 years. “You want someone with a lot of experience who can explain where these numbers are coming from. A lot of people are more than happy to do a report, but there is no certification process to call yourself a future care planner. That is the crux of the problem.”

While adjusters and lawyers say future care cost reports can be very useful in determining the need for ongoing treatment and non-medical services, some contend the frequently divergent conclusions of experts can stall the claims resolution process. There are often contradictory reports commissioned by the plaintiff’s and insurer’s lawyers.

“Sometimes you wonder what client they looked at because they are coming up with two different opinions, and that is not helpful,” notes St. Pierre. “Whether one is exaggerating or one is underestimating, at the end of the day neither report is helpful. We still have a problem and we still have a client who wants to be released from the push and pull of his claim.”

This push-pull dynamic can lead to questions about the qualifications and potential bias of report providers. Sometimes the answer depends on who is commissioning the future care report – the plaintiff or defence lawyer.

“I certainly don’t think there is any measure of standardization or a recognition of the qualifications people doing these analyses should possess,” says Mark Yakabuski, IBC vice president, Ontario. “We are talking about large sums of money. It is reflective of the approach that governments have often taken to auto insurance, and that is: let anybody and everybody in. There is a nebulous quality to any kind of estimation of future care costs. Let’s just say there are a lot of consultants who make a lot of money off this stuff.”

Laurie Walker, an accident benefits adjuster with SCM Adjusters Canada Ltd., says finding the most qualified individual is often a challenge. “The problem is that people who are most experienced on an individual claim – the treatment team – are usually not those who do the future care cost analysis,” she says. “This lends some insecurities or doubtfulness when the insurer is presented with another party’s care cost analysis based on just a file review. You start asking questions like: Are the people qualified? What kind of credentials do they have? What makes their opinion valid?”

Even those providing future care cost reports acknowledge it is far from an exact science. “Definitely a lot [of reports] out there are unreasonable,” Riverso says. “I have seen future care cost reports done by others, and I think: ‘Wow, they are either missing a lot of elements to it, or they have given the Cadillac version of everything.'”

Riverso says the current trend in future care cost analysis (also referred to as ‘life care plans’) is towards greater training and standardization. The Canadian Institute of Life Care Planners now offers a program for certification with courses at Carleton University’s Sprott School of Business and at other locations across Canada.

“This is relatively new,” says Riverso, who also recently launched a national network of life care planners to promote consistency in future care assessments. “But as lawyers and adjusters become more familiar with it, they will look for training and standards from the report providers. There are certain guidelines and standards; when you go to court or mediation, you have to be able to justify the future care cost report.”

In fact, Riverso adds, in some cases, insurance companies are improperly using independent medical examinations and future care cost reports to deny benefits and close claims files. “Insurance companies have to understand that a claim is not simply closed because they think it is; they can still be sued by the client,” she says. “The claim only really goes away when you have a satisfied claimant. By satisfied, I don’t mean you have paid them off or paid them more just to get rid of them, but rather you paid what is reasonable.”

GRAY AREAS

Ihe two most contentious areas of future care cost reports seem to be attendant care and housekeeping services. These are two among a wide range of benefits that could include medications, supplies and assistive devices, wheelchairs or mobility aids, transportation services and vocational needs.

Attendant Care

A key issue in attendant care is how long a seriously injured person will continue to need health care services such as physiotherapy, occupational therapy and speech language pathology, to name a few.

Housekeeping

Riverso notes that attendant care at today’s agency market cost of $22 per hour, at three hours per day, works out to more than $23,000 per year. Over 20 years, that amounts to more than $476,000. Similarly, many people underestimate the impact of housekeeping expenses, according to Riverso. She uses estimates from Statistics Canada to calculate time and cost of domestic chores.

“In a lot of cases, insurers are just looking at the here and now,” Riverso says. “They will focus their analysis on one particular item, such as attendant care. But we have to look at what the person needs as a whole. If the insurer discontinues benefits without looking at other services, it can backfire on them. Then they can get hit with retrospective costs in a lawsuit.”

Huclack notes insurance companies often examine the “burn rate” of a particular claimant to gauge future costs. “They look at how much has this person incurred in medical, rehab and care costs from the time of the accident to date,” he says. “The burn rate is a way to tease out the true requirements and costs. That carries a lot of weight and, combined with the speculative nature of future care cost reports, gives you a grounding as to how to approach it.”

Others argue that attendant care expenses can be exaggerated to drive up the costs of settling a serious injury claim. “I think future care reports serve an important role in setting out what potential benefits or health care needs should be made available to individuals, particularly on the tort side,” says Philippa Samworth, a partner with Dutton Brock LLP in Toronto. “What I would like to see is to take a step down. Instead of costing out things like attendant care for life, let’s pick out what you know they really need for life and take a realistic approach to those other items.”

Yakabuski says attendant care is one of the biggest components of future care costs. “It is subject, in my opinion, to substantial abuse at the current moment,” he adds. “In many cases, the report is based on almost continuous supervision, despite the fact that the person may be partly able-bodied. We have to take a hard look at the coverage that is needed and the abuses that have crept in.”

Walker says the issue of attendant care comes up especially if the claimant does not require it at the time of the future care cost report, but the provider hypothesizes that the person is going to deteriorate and require care further down the road. “That is a real subjective area, which we are expected to pay for,” she says. “Not only that, but it supports the whole notion of disability. I have had clients tell me they were more depressed after reading the future care report.”

One factor that may contribute to uncertainty around future care costs is the expanded definition of what constitutes catastrophic injury. In the case of Desbiens v. Mordini (2004), a judge ruled that psychological or mental disorders, which previously had not been included in the definition of catastrophic injury, could now be factored in with physical injuries to create “impairment of the whole person.” Yakabuski notes that IBC members have seen a spike in requests for catastrophic injury assessments, but no clear trend in increased catastrophic injury claims to date.

ADDING CREDIBILITY TO GUESSWORK

In fact, insurance companies have been hampered by the need to keep track of injury claims by frequency and severity, according to Yakabuski. “These claims can become extremely expensive and have a very long tail,” he says. “However, they are not numerous enough for companies to have systems that are sophisticated enough to capture them all.” Regulations for the Health Claims for Auto Insurance (HCAI), a new electronic data system, are expected in the near future and should give insurers better injury claims analysis.

“IBC is already doing work to get a better handle on some of these injury claims, and we are very much looking forward to using HCAI in future years to do this,” Yakabuski says. “Right now, we are doing data reviews with some member companies to better capture some of this information.”

In the meantime, several sources say future care cost reports can be improved to give insurers a reasonable estimate of ongoing liabilities. One simple way is to point out collateral sources of funding (i.e. government funding), avoid duplication of funding for same services and separate costs between accident benefits (that have caps on fees) and tort wherever possible.

A mere file review and recitation of past treatment is often of limited use, Walker says. She says it often leads her to ask: What will be the value of such future care cost reports in the future? “I like to see, for the purpose of settlement, a person asking each treatment provider to look into the future and tell them what they truly think,” she says. “That is good, useful information.”

St. Pierre adds: “I see the numbers, but I want a report that tells me how you got from point A to point B. I don’t always know how they got there. If I don’t, then the client does not, and why should we take that opinion? No insurer wants to overpay a claim and no plaintiff’s lawyer wants to settle for less than what he or she can get. Somewhere in the middle is the right number.”

Samworth agrees future care cost reports should definitely be taken with a grain of salt. “Insurance companies believe very strongly in future care cost reports,” she says. But they…have the same problem as I do, which is that the reports often have limited value. They would have much greater value if they approached everything on a more realistic and conventional basis.”