Insurance benefits backlog a nightmare for accident victims

Getting hurt in a car crash is bad enough, but for many people in Ontario, it’s only the beginning of a lengthy nightmare.

People turned down for accident benefits by insurance face a wait of as long as two years before their appeals wind their way through the system administered by the Financial Services Commission of Ontario.

That’s far more than the 60 days required by legislation.

The backlog of cases is so bad that the FSCO is looking for outside help, recently announcing a request for proposals seeking assistance from private “alternative dispute resolution” firms.

For Toronto insurance lawyer Michael Smitiuch, the backlog is an “access to justice” issue: Justice delayed is justice denied.

“Accident benefits are designed to be immediate help for people when they most need it,” said Smitiuch.

Some clients whose insurance claims are rejected are forced to take out second mortgages on their homes, get loans from family members or apply to the Ontario Disability Support Program, in order to get the financial assistance they need, says Smitiuch.

“People are desperate. Some of them aren’t able to work, and they’re told they can’t claim for things like physiotherapy, or occupational therapy. It’s simply not fair,” said Smitiuch.

The first step when a claim is denied is mediation, a less formal and less adversarial — and therefore less time-consuming and costly — solution than binding arbitration or a lawsuit. In theory, says Smitiuch, mediation is supposed to take no more than 60 days from the day an appeal is filed. But the theory doesn’t match up with the real world.

“In my experience, it’s up to 10 months wait just to get a mediator appointed,” said Smitiuch.

That was also the finding of Ontario’s auditor general Jim McCarter, in his most recent annual report, issued in December.

“FSCO’s mediation service is backlogged to the point that resolution of disputes between claimants and insurers is taking 10 to 12 months, rather than the legislated 60 days,” McCarter wrote.

If the mediation fails to come up with a resolution, people can take their case to binding arbitration, something which can drag out for another year, Smitiuch says.

A spokesperson for FSCO acknowledged by email it has seen an “unprecedented increase” in mediation applications over the past few years, which she called a symptom of the “over-utilization of accident benefits.”

Rowena McDougall said FSCO decided against hiring more staff because “the best solution would be to engage a number of companies that provide high volume services.”

In mid-January, FSCO announced that it would be seeking “requests for proposals” from private dispute resolution companies to help clear the backlog. In an open letter to law firms and dispute resolution companies, FSCO auto insurance division head Tom Golfetto, said the aim was to start clearing the backlog by May.

“It is FSCO’s intention to clear the backlog as expeditiously as possible. This cannot happen without your firm’s co-operation,” Golfetto wrote.

That’s good news, says Smitiuch.

“I think it’s a good idea to do whatever it takes to clear the backlog. I think this is a reasonable solution. But they also need to make sure it never gets this bad again,” Smitiuch said.

The lengthy delays are also a thorn in the side for insurance companies, who’d prefer to get decisions as soon as possible, according to an industry association.

“The backlog needs to be addressed so that legitimate claimants can receive the benefits they need. We want people to get better,” said Steve Kee, spokesperson for the Insurance Bureau of Canada. “We have raised the issue of the backlog for years. . . . It’s troubling claimants have to wait.”

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Writen by David Warner

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