The Upcoming Dramatic Impact Of The LAT On Accident Benefits “The Times They Are A Changing”

Introduction

Amid controversy and much consternation among the personal injury bar, the Licensing Appeals Tribunal (LAT) is coming into effect on April 1, 2016.  It is clear from a review of the procedures and practices in place that the upcoming changes will be significant and require a clear new strategy in order to address upcoming claims from an insurer standpoint.  There will be a focus on speed on behalf of the insurer to respond to a new application and at the same time produce quality written submissions.  Often speed and quality do not go hand-in-hand.  The time to assess claims is significantly curtailed and a hearing may proceed within a matter of weeks as opposed to our normal practice of months / year.  Make no mistake about it, the procedures coming into effect vis-à-vis the LAT constitute a dramatic departure from what we are used to at FSCO.

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By way of caveat I mention right from the outset that the new LAT Rules of Practice as they relate to claims for accident benefits have not been finalized.  Accordingly, some of the timelines and rules discussed below may be altered by the time that the system is up and running as of April 1, 2016.  With that being said, as an industry we need to get ready for the new system and have some procedures in place both as an insurer and as an insurance defence law firm in order to respond to what is coming.

The Elimination Of Mediations And Introduction Of The Case Conference

Under the old (existing) system a claimant must proceed to a mediation, followed by a pre-hearing, followed by an arbitration  or trial.  The new system takes away the right to go to Court and therefore one must proceed by way of the LAT.  The new system has also eliminated mediations altogether and this will have a substantive impact on the insurance industry.  Most insurers would internally handle FSCO mediations (without retaining counsel) and most of the time a settlement would be reached.  While there was a period of time in which there was an undue delay for matters to proceed to mediation, for the most part this problem had been rectified and these settlement meetings proceeded at a fairly reasonable pace.  The FSCO mediation process had the effect of saving insurers the expense of hiring counsel, was an informal process, and would be done either in-person or by phone.

If the parties did not resolve the claim at the mediation then a claimant could apply for Arbitration and a new process would commence including the opportunity to attend at a second settlement conference; this time called a pre-hearing.  Once a claimant applied for arbitration, defence counsel would typically be retained and the pre-hearing would often be scheduled about 4-6 months later.  Prior to the pre-hearing counsel would have the opportunity to review the file in order to provide an opinion to the client as to the strengths and weaknesses of the case.  Leading up to the pre-hearing a number of things would happen such as the settlement of a case, documentary exchange, or a narrowing / adding of  issues.  The process was set-up to give the parties time to control their own destiny.

The changes to the LAT will make the above steps difficult to achieve.

While as the actual process is not clear right now, the response time for an insurer is very tight.  In short, once a claimant has submitted a perfected application to the LAT, the insurer will have just 10 days in which to complete a response. After this response is completed, a case conference (similar to a pre-hearing) is to be scheduled to proceed 45 days later.  At the case conference a number of significant steps will be taken including settlement discussions, production orders, and a determination of the type of hearing (written, video, in-person).  Accordingly, the adjudicator will have much more significant powers than that of a FSCO mediator and perhaps that of a pre-hearing Arbitrator.  I have heard discussion that a case conference adjudicator may even have the power to make an order with respect to payment of benefits without the benefit of a hearing.  The case conference will constitute a substantial step in the process, and may even be the final step if an adjudicator is able to render a final or interim decision on entitlement to benefits.

Following the case conference a hearing date will be set to take place within 60 days and in one of the following three streams:  (1) written hearing, (2) video hearing, or  (3) in-person.   According to the literature, in-person hearings will only be reserved for the most “serious” of cases.

Based on the new procedural rules put into place, it appears that the deck is stacked heavily in the favor of claimant counsel.  While as the new rules will force claimant counsel to act quicker in their cases, they also have control over the commencement of the process.  After a benefit is denied, claimant counsel have up to two years to get their themselves organized in anticipation of making an application to the LAT.  With the new Rules insurers will be scrambling to respond as the luxury of time will no longer be available.  It is anticipated that astute claimant counsel will attempt to take advantage of the new procedures in order to put the insurer at a strategic disadvantage.

The Steps In The Process

The steps in the new process appears to be as follows:

1.         After the denial of a benefit the insured has the right to request that the insurer conduct an internal review of the denial.  The insurer has thirty days to conduct this internal review.  It is not clear the repercussions to an insurer if this internal review is not conducted in time.  The good thing about this internal review is the insurer is given a “heads up” that this is a benefit that may be disputed into the future.  However, the claimant is not required to request this review and may simply skip to step 2.

2.         After the denial of a benefit the insured has the right to submit an application to the LAT.  As per the LAT Rules, a tribunal may decline to process an appeal unless all documents are received.  Presumably an administrator will review the application and act in a sort of “gatekeeper” function to make sure that the necessary documents accompany the application.  At this point is not clear what constitutes a “complete application” and whether there will be a checklist of necessary documents including medical and / or employment records. It is also not clear whether the insurer will have the right to challenge that the application is actually “complete” or simply seek an order for the production of documents thereafter.

3.         Within 10 days of receipt of the “complete application” an insurer is to provide a response.  It is not clear to what extent the application and the response are designed to elaborate as to the substance of the claim.

4.         Within 45 days of the response being filed, the parties are to attend at a case conference.  As per the Rules, for the purposes of the case conference, each party is required to submit a detailed document called a Case Conference Summary at least 10 days before the case conference which shall include the following:

 (a)        A list of key documents that will be used at the hearing;

 (b)        Verification that the documents above have been served on the other side;

 (c)        A list of documents that the party intends to seek from other parties pursuant to the disclosure rules;

(d)       A list of any information the parties are seeking from non-parties and requests for issuance of summons;

(e)        The party’s preference of hearing type with reasons for the preference;

(f)        A list of anticipated witnesses including expert witness that the party intends to call at the hearing and a brief description of each witnesses’ anticipated testimony;

(g)        An explanation of the necessity of calling more than two expert witnesses to provide opinion evidence if the party seeks to call more than two such experts;

(h)        Details of the most recent settlement offer.

The Rules provide that each of the parties must disclose to the other side, before the case conference, all documents available to them which they intend to rely upon at the hearing.

It is clear that the case conference summary is designed to be substantial and that the parties are being compelled to give some thought as to their hearing strategy.  It appears that great influence is being placed at the case conference for the adjudicator to encourage the parties to arrive at a settlement.  I believe that the written case conference summaries are going to have a substantial influence on the adjudicator; and the better written the more persuasive they will be.

5.         As per the Rules, the case conference may proceed by telephone, video-conference, or in-person.  I understand that with few exceptions that the case conference will proceed by telephone.  This is a significant departure from the current system in which pre-hearings primarily proceed in person.  It goes without saying that in-person pre-hearings are much more effective than over the phone.  This would be the only time that the defence gets to meet the claimant first hand to get a sense of their credibility.  Similarly, one got to meet the opposing lawyer and the adjudicator in order to develop a working relationship.  The opportunity for settlement will be hampered by this change.

6.         As per the Rules, the adjudicator is given certain powers which may turn out to be substantive.   An adjudicator may initiate a discussion about the various issues (see below) or act in response to a written request.  The fact that this must be a written request further emphasises the importance of the written submissions in the case conference summaries.  It is not clear at this point whether the adjudicator may make an order with respect to any of the following if the issue is opposed, or just ask the parties to consider the issue.  If the adjudicator can order the parties to do something at a case conference then this is a substantive power that should be considered.  As per the Rules, “the tribunal may on its own initiative, or in response to a party’s written request, direct the parties to participate in a case conference to consider” the following:

(a)        The settlement of any or all of the issues;

(b)        Facts or evidence that may be agreed upon;

(c)        The identification, clarification, simplification and narrowing of the issues and whether further particulars are required;

(d)       The identification of parties and other interested persons, adding parties and the scope of each party’s or person’s participation in the hearing;

(e)        Disclosure and exchange of documents, including witness statements and expert reports;

(f)        The dates by which any steps in the proceeding are to be taken or begun;

(g)        The estimated length of the hearing, including setting hearing dates;

(h)        Requirements for interpreters;

(i)         French-language or bilingual proceedings;

(j)         Human Rights Codes or accessibility accommodation;

(k)        Motions, provided parties have complied with the requirements of the Rules or otherwise on consent of the parties or Order of the Tribunal;

(l)         Any other matter that may assist in a fair and efficient resolution of the issues in the proceeding.

7.         At the case conference a decision will be made as to whether the hearing will proceed by ways of (1) writing (2) video conference or (3) in-person.  It is understood that a hearing will proceed in one  of these formats within 60 days of the case conference.

According to the literature, an in-person hearing is reserved for the “most serious cases”.  While it is easy to surmise that catastrophic claims will proceed by way of an in-person hearing, it is not clear what else is considered to be serious.  Is a claim for IRBs that is limited to the two year mark subject to a written hearing while a claim for IRBs based on the post-104 test subject to an in-person hearing?  Is a dispute as to whether the claimant has suffered a MIG injury limited to a written hearing?  As we know, a finding that the claimant is outside of the MIG opens the door to the availability of up to $50,000 in medical benefits from $3,500 and the entitlement to attendant care benefits.

If a claim is limited to a written hearing then an adjudicator is unable to assess the credibility of a claimant, the witnesses, or hear from any doctors.  A written summary of a case as prepared by a lawyer pales in comparison to what a witness says for themselves.

8.         There appears to be two rights of appeal from a LAT decision.  First, as per the Rules any of the parties, or the adjudicator on their own initiative, may request a “reconsideration” within 30 days of the decision.  The criteria for granting a reconsideration is as follows:

(a)        There are new facts or evidence that could be potentially determinative of the case and could not reasonably have been obtained earlier;

(b)        Through no fault of their own, the party seeking the reconsideration did not receive notice of the hearing and did not attend;

(c)        The decision that is subject to the reconsideration appears to be in conflict with the established jurisprudence or Tribunal procedure and the issue involves a matter of significant importance;

(d)       The Tribunal acted outside of its jurisdiction or violated the rules of natural justice or  procedural fairness;

(e)        There is a significant error of law or fact such that the Tribunal would likely have reached a different decision;

(f)        The Tribunal heard false or misleading evidence which was only discovered after the hearing and that would have affected the result;

(g)        Other factors exist, that significantly outweigh the public interest in the finality of the Tribunal’s decision.

It is expected that there will be substantial litigation revolving around these seven criteria for reconsideration.  On the face of it, the language of the criteria appears to be quite vague and gives rise to potentially liberal interpretations.

The second right of appeal is by way of judicial review to the Divisional Court on a question of law.  Traditionally, appeals by way of judicial review are difficult to accomplish as the Divisional Court prefers to defer to the expertise of a specialized Administrative panel.

Other Procedural Considerations

Tribunal May Dismiss An Application On Its Own:  Upon receiving the application, the LAT Rules provide that the tribunal may dismiss the appeal without a hearing (but on notice of the parties) on the basis that (1) the claim is an abuse of process (2) the matter is outside of the Tribunal’s jurisdiction (3) the statutory requirements for bringing the application have not been met and (4) the party filing the application has abandoned the proceeding.  Most significantly will likely be point #3.  If an applicant fails to comply with the LAT Rules (such as documentary requirements) the tribunal may take action on its own to dismiss an appeal on its own volition.  The parties will then be given at least 10 days to provide written submissions to address the dismissal.  Claimant’s representatives who do not abide by the new procedures set-out in the LAT (and those that are simply disorganized) may see their claims dismissed outright for failing to comply with the LAT rules.

Disclosure Requests: The LAT Rules stipulate that:

“At any time in a proceeding, the Tribunal may order any party to provide such further particulars as the Tribunal considers necessary for a full and satisfactory understanding of the issues in the proceeding”.

This is an important power that a FSCO mediator did not have and that an insurer should utilize as quickly as possible.  After receiving the application the insurer should make submissions to the Tribunal about the necessity of certain documentation and reasons why it is necessary for an understanding of the issues in the proceeding.  It should not be expected that a “gatekeeper” administrator who receives the application will know what documentation is necessary in order for the application to be complete.  The benefit of the new procedures is that an insurer can request the necessary documents presumably at the outset of the proceeding and obtain an order for the production of same.  This is very important in light of the tight timelines set-out for the disclosure of documents before a hearing.

Disclosure Of Documents And Witnesses Before A Hearing:   The disclosure requirements of documentation and witnesses prior to the hearing is very tight.  Absent an order otherwise, the parties are only required disclose documents and a list of lay witnesses (including a will-say statement) a minimum of 10 days before the hearing.  The prior Rule allowed for 30 days before the Arbitration.  Accordingly, if a claimant serves hundreds of pages of clinical notes and records 10 days before the hearing an insurer, their counsel, and any retained expert will be hard-pressed to address these records before the hearing proceeds.

Expert Witnesses: In the case of expert witnesses, a claimant has to disclose the identity / report of an expert witness 30 days before the hearing and the insurer must do the same 20 days before the hearing.  Clearly there is a risk of real prejudice to an insurer if a new expert report is served by the claimant within this 30 day time frame as it will be near impossible for an insurer to be able to obtain a responding report ten days later.

The new Rules stipulate that an expert witness must certify that he / she has provided an opinion that is within their expertise as well as fair, objective, and non-partisan.  This is similar to the requirement of experts in tort cases.  In tort cases an expert is asked to sign an “Acknowledgement of Expert’s Duty Form” when preparing their report and it is recommended that insurers do the same thing at the outset when insurer examinations are scheduled.

The new Rules stipulate that if “a party intends to challenge an expert’s qualifications, report or witness statement” that a party must set-out the reasons for the challenge no later than 10 days before the hearing; and file it with the Tribunal.  It is not clear what is being targeted by this Rule.  It is not clear if this rule is restricted for a party to:

(1) dispute that an expert is qualified to give an opinion on a subject such as an orthopaedic surgeon commented on psychological issues or,

(2) to challenge any substantive issues within the report — which could include virtually anything within the report.

If written notice is not given within 10 days before the hearing, it is not clear if that means that a responding party is not entitled to challenge certain underpinnings in the report.

I have heard that expert reports are being limited to be limited to 12 pages in length.  It is not clear what substantive rationale there is for the LAT to tell a doctor how long his/her report should be.  The only apparent benefit for this change is so that the LAT adjudicator has less to read when preparing his/her decision.  Expert witnesses will need to be told to prepare good quality reports in a succinct manner.  It will be harder for the parties and adjudicator to determine the quality of a doctor’s analysis when page limits are imposed.

Adjournments:  Adjournment requests must be served in writing which stipulate the reason for the adjournment and three alternative dates must be given within 30 days of the case conference or hearing.  As such, there appears to be little opportunity for a party to delay a case conference or hearing even for legitimate reasons.

An Increase In Litigation Is Expected

A review of the new Rules and procedures leads many of us to expect that there will be an increase in litigation.  With the elimination of the FSCO mediation, claims will immediately proceed to the Arbitration stage.  As such, insurers will not have the ability to resolve claims via this mediation procedure before the commencement of an Arbitration.

The new tight timelines set-out by the LAT will result in insurers not having a buffer of time in order to have an opportunity to re-evaluate their decisions and negotiate a resolution.  Within 55 days of the filing of an application for arbitration the claim will proceed to a case conference in which the parties will have to be virtually ready to proceed to an Arbitration.  The case conference is not simply a stage to engage in settlement discussions but where there will be key decisions made about evidentiary / legal issues that will be addressed at the Arbitration.  Further, the fact that within 60 days of the case conference there will be a hearing will result in the parties preparing for Arbitration at a rapid pace.

The FSCO Rules provided that a pre-hearing would typically proceed in-person.  This allowed the parties to have face-to-face meetings which would allow the parties to meet one another and briefly evaluate a claimant.  This gave the insurer an opportunity to assess a claimant’s credibility and it often would have an impact on the valuation of a case.  Further, in-person settlement meetings are a great opportunity to negotiate a settlement.  The new emphasis on telephone case conferences will prevent an insurer from having any meaningful opportunity to meet a claimant.  In addition, it is much easier to fail a settlement meeting on the phone than it is in person.

The fact that the process will focus on more written hearings will also sharply increase the number of matters that proceed to a final decision as opposed to settlement.  The oral hearing procedure that was in place via FSCO had the effect of encouraging settlement.  Very few claimants want their private lives cross-examined in open court and insurers did not want to pay for the expense of these hearings.  Indeed, the cost for a medical doctor to attend at an Arbitration for a full day would often be in the neighborhood of $10,000.  Now, with the focus on written hearings there is little disincentive for either a claimant or an insurer to proceed to a hearing.  To use a sports analogy, the mentality will likely be, “Why not take a shot?”.

One of the great disincentives to proceeding to an Arbitration was the cost consequences of losing.  While as the costs ordered at FSCO were based on extremely low legal aid rates, this could still amount to a few thousand dollars.  The new Rules do not have a provision to order costs to be paid by the loser of an Arbitration.  The Rules provide that costs may be ordered where a “party in a proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith”.  As such, if a party has any sort of quasi-viable claim for benefits then there will not be any costs consequences for losing at a hearing.  There is no cost maximums specified in the new Rules but the old Rules limited costs to $500 for each half day attendance at a motion, case conference, or hearing.  As such, it is expected that any award of costs in the new realm will be limited at best; and likely not serve as a deterrent to proceed to a hearing.

Strategies To Respond To The New Changes

With the upcoming changes to the accident benefits world it is expected that there will be a greater focus on quality and speedy written submissions.  This will be at both the case conference and the hearing stage.  With the new emphasis of the LAT Rules to focus on written hearings to proceed at an expeditious pace, insurers will need to carve out a strategy to respond to these claims.  The easy approach would be simply to attach all medical assessments / records and hope that an Arbitrator will review everything and come to the right decision on their own.  I expect that an Arbitrator will be more impressed with a party that provides a set of materials that contains a quality analysis of the facts / law as opposed to another side who simply attaches the documents with little-nil analysis.

Indeed, the adjudicators are on very strict timelines themselves to provide a written decision and it should not be expected that they will piece through all of the documents to discover the thread of your argument.  Submissions should be prepared persuasively and thoroughly.  I expect that an adjudicator will appreciate the assistance and this likely will influence the decision making process.

I expect that claimant counsel will start building their cases and commence their analysis long in advance of filing an application for arbitration.  Since they are in control of when the process commences they also will have the opportunity to spend the time to prepare their submissions. An effective claimant counsel will devise a system in which their file will be prepared and ready to go even before an Application for Arbitration is commenced.  This will place a greater burden on the insurer to effectively respond to these claims.

There are a few ways in which an insurer may respond:

1.         An insurer may handle everything internally from beginning to end including preparing written submissions.

2.         In the event that an insurer chooses to retain counsel, a few options are available.  The most pro-active and likely effective strategy would be to retain counsel shortly after a benefit is denied in a circumstance in which it is abundantly clear that a dispute will arise.  The most obvious examples are a claim for: (a) catastrophic determination (b) income replacement benefits (c) non-earner benefits (d) multiple / costly treatment plans (e) a questionable denial of medical benefits due to MIG and (f) some disputes over attendant care benefits.  The advantage of this approach is multi-faceted.  The insurer will have the opportunity to review counsel’s legal opinion before an Application is commenced in order to decide whether to maintain the denial and / or resolve the claim.  This has both  substantive / cost benefit advantages of resolving a claim before an ongoing dispute escalates;  and saves the cost of the LAT filing fee.

For claims in which a resolution does not occur, your counsel will have the time and opportunity to prepare quality written submissions in response to an Application as well as deal with all of the legal issues that arise.  This will level the playing the field and give the insurer an opportunity to properly address their case.

3.         In the event that counsel is retained only once an application for arbitration is made, then it is recommended that files be provided as soon as possible.  If the claimant requests that  an insurer conduct an internal review of the denial then this gives the insurer an additional 30 days to send the file to their counsel in anticipation of a claim.  Otherwise, there is only 55 days between the time that an application is served on the insurer and the time that a case conference must proceed.  As set-out above, a significant amount of action should be taken before that time.

Conclusion

At the beginning of this article I set-out a preface that the Rules are not yet set-in stone and that further changes may be forthcoming.  Perhaps once the LAT process commences certain kinks will be ironed out which may result in a smooth and efficiently run system. Clearly that is the goal of the new LAT Rules and the reason for eliminating FSCO from handling new claims commencing April 1, 2016.  However, make no mistake about it, the changes are substantive and will result in a dramatic departure from the way claims are processed.  From an insurer’s standpoint there is a need to review the denials of claims right from the outset and continue to review the denials once new information arises.  If not, there will be little to no time thereafter to double check one’s decision.

The new Rules focus on procedural expediency and give the parties (especially the insurer) little opportunity to substantively address a new claim, and prepare for a hearing.  Insurers, and their law firms, need to have processes in place to address the new changes.  The new Rules require an insurer to be fully apprised of the file contents from a settlement, legal, evidentiary, disclosure, and hearing readiness standpoint by 55 days from the time of receipt of the application for arbitration up to the case conference proceeding.  And, the parties will have been required to provide comprehensive submissions by way of a case conference summary 10 days before the case conference.  A hearing (mostly written) will likely proceed 60 days thereafter.  Good advocacy will likely shift to quality writing as opposed to effective in-person cross-examination of witnesses.

The effect of the new changes will likely result in more written hearings on all sorts of matters; and fewer settlements.  There will be less disincentive for a claimant to proceed to a hearing and effectively no cost consequence if they lose.  Hearings will likely grow by quantity and not quality.  Due to the sheer numbers of expected hearings that will take place, an insurer will also be challenged to respond to this quantity of hearings in a quality manner.  Undoubtedly the new changes are going to increase the amount of expected litigation and require new comprehensive strategies to deal with the uncertainty that is surely to follow.

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