Michigan Drivers to Test Crash-Avoidance System

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Image: General Motors

The largest-scale test of whether lives could be saved by giving cars the ability to communicate with each other on the road got under way here last month in a program that could steer the future of auto safety regulation.

For the next year, about 3,000 Ann , Michigan Arbor residents will go about their daily driving in cars outfitted with electronic gear that tracks their vehicle’s location and the locations of other similarly-equipped vehicles.

If two vehicles appear to be on a collision course, alarms will chime—or in some cases a machine-generated voice will issue a warning. The systems, for example, can alert a driver when a vehicle three or four cars ahead in a line of cars jams on its brakes, and sound a warning to prevent a rear-end collision.

The project, funded with $25 million from the U.S. Department of Transportation, will generate data that regulators will use as they weigh whether future cars should have such “vehicle-to-vehicle” crash avoidance technology as federally-mandated standard equipment.

Safety regulators and automotive technologists are enthusiastic about the potential of vehicle-to-vehicle safety technology, but officials cautioned that they need to know more about how drivers react to the warnings the systems provide.

But until his agency gets more data on how vehicle to vehicle technology works in day-to-day driving with ordinary citizens regulators won’t start work on new rules requiring such systems.

Efforts to push widespread adoption of vehicle-to-vehicle safety systems could encounter various obstacles, including tight federal and state budgets, consumer resistance to technology that tracks their location, the costs of the hardware and software, and uncertainty about where liability would rest if a system failed to prevent an accident.

The biggest uncertainty with new safety technology is how drivers will respond to warnings—particularly if they come too frequently or are too often false alarms. Recent research by the Insurance Institute for Highway Safety found that lane departure warning systems installed on a growing number of new vehicles have so far had no significant impact in reducing crashes, according to its analysis of crash data.

Eight major auto makers have provided vehicles and engineers to the yearlong Ann Arbor road test called he Connected Vehicle Safety Pilot Program, which will be overseen by researchers from the University of Michigan’s Transportation Research Institute.

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Coming of Age

FSCO's recent report to the Ontario finance ministry suggest that evidenced-based health care has taken centre stage in the province's auto insurance system.

by Dr. Pierre Cote and Willie Handler

August 2012 issue of Canadian Underwriter

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Evidenced-based health care has existed in Ontario for years, but only until recently has the concept been introduced into Ontario’s auto insurance system. The recent recommendations made by FSCO’s Superintendent regarding changes to the definition of “catastrophic impairment” as well as the soon to be announced review of minor injury protocols are examples of how evidenced-based health care is slowly gaining acceptance.

Evidence-based health care aims to apply the best scientific evidence to clinical decision-making. This helps clinicians understand whether treatment will benefit their patient or as in some cases do them harm.

Professor Archie Cochrane, a Scottish epidemiologist, through his book Effectiveness and Efficiency: Random Reflections on Health Services (1972) introduced growing acceptance of the concepts behind evidence-based health care. The explicit methodologies used to determine "best evidence" were largely established by a McMaster University research group in 1990.

Changing practices and incorporating the best available scientific evidence into one’s practice is often challenging for clinicians, insurers and policy makers alike. Barriers to the adoption of new evidence are grounded in one’s own preferences, beliefs, experiences, expertise and education. Improving the use of evidence-based recommendations requires that stakeholders develop a better understanding of the benefits of evidence-based practice for patients and society.

In Ontario, the evidence-based management of injuries is gaining acceptance. The WSIB developed a number of Programs of Care over the last 15 years which are evidence-based health care delivery plans that describes treatments shown to be effective for workers diagnosed with specific types of injuries (eg., acute low back injuries, upper extremity injuries). FSCO adopted the Program of Care concept when it released two Pre-Approved Frameworks for WAD Injuries in 2003 and the Minor Injury Guideline in 2010.

The Catastrophic Impairment Expert Panel

The Government’s 2010 auto insurance reforms included a recommendation that the Superintendent appoint a panel of medical experts to review the definition of “catastrophic impairment.” A panel was appointed by the Superintendent in December 2010 and asked to identify the ambiguities and gaps in the current SABS definition in order to reflect emerging scientific knowledge and judgment. The panel submitted two reports to the Superintendent during 2011 and in December of the same year the Superintendent reported back to the Minister of Finance. The Superintendent’s report was made public on June 12, 2012.

The Superintendent’s report

The Superintendent has accepted the panel’s recommendations regarding the use of clinical measurement tools to improve the accuracy, relevance, clarity, validity, reliability and predictive ability of catastrophic impairment determinations. The use of these tools will introduce more fairness into the system because catastrophic impairment determinations will be based on tools that will limit the amount of errors. Moreover, accident victims will not have to rely on the persuasiveness of their representatives that they are deserving of the designation.

The following chart outlines the new proposed measurement tools and the evidence provided by the panel for adopting those tools.

Impairment	Current Test	Proposed Test	Evidence
paraplegia and tetraplegia (quadriplegia)	None	American Spinal Injury Association classification of spinal cord injuries	standard in medical practices literature suggests classification system is valid and reliable
amputations	none	None	clinical and scientific judgment of Expert Panel members
burn and crush injuries to limbs	not covered in SABS	Spinal Cord Independence Measure	clinical and scientific judgment of Expert Panel members The scientific evidence supports the validity and reliability of the SCIM
blindness	None	Legal blindness
traumatic brain injuries in adults	Glasgow Coma Scale Glasgow Outcome Scale	Extended Glasgow Outcome Scale	strong psychometric properties and reliable when used with a structured interview and standard scoring algorithm
other physical impairments	whole body impairment rating using American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th Edition	whole body impairment rating using American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th Edition, Chapters 3-13	very little scientific literature supporting use for determining catastrophic impairment but Expert Panel found no alternative rating system
psychiatric impairments	class of mental or behavioural disorder using American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th Edition, Chapter 14	Global Assessment of Functioning Scale	literature suggests scale has adequate reliability and validity
combining physical and non-physical impairments	none but the courts have assigning whole body impairment scores to impairments under Chapter 14 of AMA Guides to allow combining with scores under Chapters 3-13	no combining	no scientific literature to support combining physical and non-physical impairment ratings The physical and mental/behavioural impairment rating chapters were not developed to be combined
traumatic brain injuries in children	None	King’s Outcome Scale for Children Head Injury	little scientific evidence to support so Expert Panel recommended a study be conducted

The panel identified a number of areas where there was little scientific evidence to support a recommendation. In these cases they relied on their collective clinical judgment. Their goal was to eliminate or reduce the inconsistencies that have existed in the process for determining catastrophic impairments.

In addition to new measurement tools the Superintendent recommends some further changes to the definition and the process for determining catastrophic impairments. Children (claimants under age 18) with serious brain injuries that have been admitted to a major trauma centre will be automatically designated as catastrophic. No assessment will be necessary.

As well, the Superintendent recommends interim benefits be made available to certain claimants where due to their injury types, making an early catastrophic impairment determination would not be possible until much later. He recommends a $50,000 monetary cap which maximizes the chances of achieving the fullest possible recovery. The Superintendent recommends that the interim benefits be available to claimants with serious brain injuries and those awaiting a final determination using the AMA Guides following a traumatic physical injury.

Although the Superintendent indicated that catastrophic impairment evaluators need specialized training, in particular in the use of the proposed measurement tools, he did not accept the panel’s recommendation that evaluators be required to complete university-based training.

Stakeholder Consultations

The Superintendent conducted stakeholder consultations in the spring of 2011 following the release of the panel’s first report. FSCO received 33 submissions which are posted on the FSCO website. As is common when initially presented with evidence-based recommendations, not all stakeholders were supportive of the panel’s report. Again, this emphasizes the need for education about the merit of the recommendations.

In his report, the Superintendent has made it clear that moving ahead with changes to how catastrophic impairment is determined introduces evidence-based health care to the Ontario auto insurance system.

Conclusion

Should the government make regulatory changes based on the Superintendent’s report it will usher in the adoption of evidence-based methodology to not only the evaluation and treatment of minor auto accident injuries but also when evaluating the most serious ones. It will also be important that the definition be examined periodically to ensure it still reflects emerging scientific knowledge and judgment.

Is Ontario Ready For Public Auto Insurance?

I was pretty surprised when I saw Toronto Sun columnist Alan Shanoff propose that Ontario consider public auto insurance in his column on September 1, 2012. There have been similar columns over the years since Bob Rae tried to introduce such a system after his election win in 1990. However, they have never appeared in the Toronto Sun which has always criticized big government and shown a strong preference to private enterprise over government bureaucracy. After all, if the government can't properly regulated the price of auto insurance, will it be more successful at delivering the product?

So has the Ontario auto insurance system fallen to such a low level of disrepute that the Sun is calling for public auto?

I happen to have a lot of interest in the topic having worked on the public auto insurance project until Bob Rae pulled the plug on it in 1991. Those auto insurance reforms continued and concluded with the passage of the ill-conceived Bill 164.

Shanoff points to the success of government-run systems in British Columbia, Saskatchewan, Manitoba and Quebec. It's true that drivers in those provinces are not lobbying to return to private-delivered insurance. For the most part premiums have been stable in those jurisdictions while in Ontario we seem to go through a cycle of rising rates every 5 years or so.

I personally believe government-run auto insurance could succeed in Ontario - under the right circumstances. However, it is also possible that public auto insurance could fail to deliver lower rates or a fairer system. The Workplace Safety and Insurance Board (WSIB) is not a shining example of a stable government-run insurance system. That system has undergone benefit cuts and underfunding for the past two decades. Would a public insurer be more like the SAAQ in Quebec or the WSIB in Ontario?

Shanoff points to the presentation made by Howard Pawley, former premier of Manitoba, to Ontario’s Standing Committee on Finance and Economic Affairs in July. According to Pawley, “administrative costs of public plans avoids costly administrative duplication and are only one half as much as those incurred by private insurance companies.” That also happens to be one of the advantages our OHIP system has when compared to private health insurance in the U.S. - i.e., lower administrative costs.

Ontario auto insurance companies collect about $10 billion in premiums annually. If administrative savings could reduce costs by just 5% that could translate into an overall saving of $500 million. If a government-run insurer could take advantage of such things as preferred providers and beter control over health care pricing, as is the case with the WSIB, there could be additional savings. Other savings could be achieved by integrating vehicle registration and auto insurance renewals. Perhaps higher benefit levels could be restored.

I don't see government-run auto insurance happening in Ontario. Too much strong opposition from interest groups and other more important priorities for the government. But more than a few people must be wondering what would have happened if Bob Rae had gone forward with his public auto insurance initiative.

Insurance News - Wednesday, August 29, 2012

Deloitte Report Estimates U.S. P & C Insurance Fraud At $30 Billion

A recent report, A Call to Action: Identifying Strategies to Win the War Against Insurance Claims Fraud, released by Deloitte says auto insurance and workers’ compensation are the two biggest sources of an estimated $30 million in insurance fraud.

With losses mounting from fraudulent claims, fraud management has moved higher on the agenda of senior management. Many companies have taken steps to improve their ability to identify and address fraudulent claims, but these efforts have typically been fragmented. Effectively addressing claims fraud rests on four pillars of an integrated fraud management program:

• Develop a fraud management strategy
• Align the operating model
• Improve information quality
• Leverage advanced technology tools and analytics

The Deloitte report can be downloaded here.

Deloitte has also reported on the cost of auto insurance fraud in Ontario. Information about that report can be found here.


Falling On Ice Outside A Vehicle Is Not An Accident Under The SABS

A woman who slipped on ice after exiting her car is not eligible for auto accident benefits in Ontario because the incident does not constitute an “accident” under insurance regulations, a director’s delegate of the Financial Services Commission of Ontario (FSCO) recently ruled.

In Wawanesa Mutual Insurance and Webb, Daphna Webb was injured when she parked in a residential neighbourhood. After parking at a pedestrian access point along a snowy street, she exited the driver side and walked around the front of her car. Webb slipped and fell on ice, breaking four bones in her foot.

The burden of proof rested with Ms. Webb to show on a balance of probabilities that she was injured as a result of an accident pursuant to subsection 2(1) of the SABS. The arbitrator found in her decision dated May 12, 2011, that Ms. Webb satisfied her burden.

Disembarking from a motor vehicle is a normal activity required by the use or operation of a motor vehicle. The key question to be answered was whether Ms. Webb's injury was "directly" caused by the use or operation of her motor vehicle.

Wawanesa submitted that the access point constituted a different geography and was an intervening event. Once Ms. Webb had exited her vehicle and walked to the front of her vehicle, the disembarkation had concluded as she stepped onto the access point and, accordingly, she was no longer engaged in the ordinary activities to which an automobile is put. The arbitrator disagreed on this point.

The director's delegate disagreed with the arbitrator. He indicated that Ms. Webb was not in the process of actually disembarking from the vehicle when the incident took place. She was not intending to momentarily return to her vehicle so no auto contributed physically to her injuries.

Arbitration Appeal Decision Regarding Failed Mediation

On February 10, 2012, in Leone and State Farm, a FSCO arbitrator ruled that mediation was deemed to have failed because it did not take place within 60 days of an application being filed and that the parties could not extend the time limit on consent once 60 days had expired.

In this particular case the claimant filed for mediation on September 28, 2010 and FSCO acknowledged receiving the application 2 days later. A mediation number was assigned to the file and the claimant was informed that there would be a delay in assigning a mediator because of high volumes.

The claimant filed for arbitration on March 14, 2011 indicating that although mediation had not taken place, it had failed because of the passage of time. FSCO received the arbitration application 169 days after receiving the mediation application. On August 18, 2011 a mediator was assigned to the file, 382 days after receiving the mediation application. The claimant maintained the position that mediation had failed. There had been an agreement to extend the timelines but the arbitrator ruled that it was invalid because 60-day timeline has already expired.

The insurer supported the position of FSCO that the 60-day timeline does not begin until a mediator has been assigned. The arbitrator disagreed with this interpretation of the statute. The arbitrator also disagreed with the position that a mediator's report is required stating that mediation has failed. The arbitrator indicated that the requirement in this case was unreasonable and should be waived.

The arbitration decision was appealed.

On July 31, 2012, a decision​ was released by the director’s delegate that upheld the 60-day deemed failure but stated that the parties had the ability to extend the time for mediation, as has been the practice for many years.

The director's delegate agreed with the arbitrator that the 60-days timeline begins when a completed application is filed not when a mediator is assigned. Therefore, the mediation was deemed to have failed by November 29, 2010.

The director's delegated disagreed with the arbitrator on the issue of extending the timeline. He indicated that the parties could extend the timelines after the 60-days timeline has passed and to prevent the parties from doing so would be contrary to the intent of the statute.

Finally, the director's delegate also agreed that the arbitrator had the ability to waive the requirement of a mediator's report before filing for arbitration.

Anti-Fraud Task Proposes Regulating the Towing Industry

The Task Force observed that oversight and enforcement activities around tow truck operations in Ontario are inconsistent across the province, creating opportunities for fraud organizers, and for tow-truck operators themselves, to exploit. Issues raised include the participation of some tow truck operators in the creation or manufacture of false claims, exorbitant towing fees, and inappropriate referral practices (such as paid referral fees for directing consumers to particular health care, automotive body shop, or legal service providers).

The Task Force asked the Regulatory Practices Working Group (RPWG) to examine options that would reduce the potential for practices that may fraudulently inflate insurance costs without impairing quick removal of damaged vehicles from roadways.

The RPWG established an ad-hoc inter-ministerial committee to help gather information and conduct analysis on the towing industry. Their focus has included:

• options to address practices that may fraudulently inflate insurance costs;
• broader regulatory options that also address road safety and consumer protection; and
• market-based options.

Here are the options that the Task Force would like feedback on from stakeholders and the public:

1. Give consumers better information, including information about personal rights and responsibilities, as well as existing protection from potentially unfair or deceptive acts or practices.

The objective would be to alert consumers — and provide a signal to members of the towing industry potentially involved in fraudulent or abusive activities — that these activities are prohibited.

2. Strengthen existing bans on paid referrals to other services.

Bans on accepting referral fees already exist in some municipal bylaws and UDAP regulations — however, these are not consistent. For example, they do not apply to every tow and are limited to municipalities where bans exist and/or where auto insurers pay. Creating a province-wide ban on referral fees for other services could provide greater clarity and consistency.

3. Harmonized municipal business licensing.

This option would require municipal business licensing based on provincially-set standards/requirements — potentially including fees, codes of conduct, and bans on paid referrals. This would have the objective of creating greater consistency in municipal licensing.

4. Provincial business licensing through a Designated Administrative Authority (DAA).

Under this option, the province could create a new regulatory regime through a third-party Designated Administrative Authority (DAA, a non-Crown and non-profit entity) that would oversee provincewide requirements. A DAA model establishes an accountability and governance framework between a Ministry and a not-for-profit corporation that administers legislation on behalf of the government.

5. Roster system similar to what has been established by Halton Regional Police Services.

Halton Regional Police Service maintains a list of pre-selected towing operators to recommend to consumers requiring towing services. Consumers are directed to the first available towing operator based on a rotating list of eligible businesses.

My thoughts...

The DAA model is appropriate where the government determines a well-regulated industry has the maturity and sophistication to take over regulatory responsibility. An example is the travel industry. The towing sector is not currently regulated by the province and certainly isn't sophisticated enough to develop a DAA. This is not a workable model.

It makes sense to build on the existing network of municipal licensing regimes and develop provincial-wide standards and rules. This will also prevent the confusion what currently exists when towed vehicles cross municipal borders. There is also a lot of merit to a roster system that is used in Halton. A similar system exists in a number of U.S. jurisdictions and eliminates chasers from the system. I understand that in these jurisdictions the police provide the first towing firm called a limited amount of time to make it to the scene and then contact the next company of the roster.

Bans of referral fees are well intentioned but difficult to enforce. These payments are "under the table" and difficult to uncover. I believe the best way to combat referral fees is to control fees charged by towing companies, body shops and rehabilitation facilities. Controlling fees reduces the ability to pay for referrals and then pad bills to cover the payments.

Anti-Fraud Task Force Considering SABS and UDAP Changes

Ontario auto insurance stakeholders may be tired of SABS reforms still the Auto Insurance Anti-Fraud Task Force in their status report is suggesting consideration of a number of SABS changes put forward by the insurance industry to assist in deterring and dealing with fraud. These related to relationships between insurers and claimants.

1. Require claimants to confirm attendance at treatment facilities

Insurers have reported being billed for treatments that never took place. In some circumstances the claimant or injured person was unaware this occurred. The Statutory Accident Benefit regulation could be amended to require health care providers and assessment facilities to ask claimants to sign a form each time they receive a treatment. Copies of the forms would have to be kept on file and made available for inspection by a representative of the insurer at the time of audit.

I'm not so sure this is really needed. On July 1, 2011 section 46.2 was added the SABS to provide insurers with the ability to request information from providers to verify that treatment had been provided. That could include clinical notes and other records. Verification of treatment provided already exists and, in fact the clinical record even specifies the type of treatment provided as well as the date.

2. Require claimants to confirm receipt of goods and services billed to insurers

Insurers have reported being billed for goods and services that were never provided. In some circumstances the claimant or injured person was unaware this occurred. The Statutory Accident Benefits regulation could be amended to require providers of goods and services to ask claimants to sign a form when they receive goods. Copies of the forms would have to be kept on file and made available for inspection by a representative of the insurer at the time of audit.

There is some merit to this proposed provision. However, this information should also be in the clinical records. An additional requirement would suggest that clinicians are falsifying clinical records which may be occurring though I don't recall anyone ever raising it as a problem.

3. Require claimants to attend up to two examinations under oath upon request of insurer

Insurers sometimes have difficulty substantiating a claim without additional information that only the claimant could provide. The current regulatory regime requires only one examination under oath and in many cases this examination takes place very early and is directed at establishing which insurer is the responsible insurer where there is more than one company involved and doubt about the facts. Insurers have suggested that once treatment has commenced it would be desirable to allow for a second examination under oath if an issue arises that could not have been anticipated at the time of the first examination, or where the first examination had to wholly be used to establish which insurer was responsible for a claim. As a matter of due process, it is important that additional criteria be established around this proposal to ensure that claimants are treated fairly during the administration of these examinations under oath.

I agree with this proposed provision.

4. Require a claimant to pay their insurer a $500 fee for missing a medical examination as requested

Insurers are billed when claimants fail to attend a medical examination arranged by the insurer at an agreed time and place. It has been reported that some legal representatives have told their clients not to attend, and to not give notice. The SABS could be amended to require the claimant to pay a fee of $500 toward the cost of the missed appointment when the person has missed an appointment, without giving reasonable notice or without offering a reasonable explanation for failing to give notice in time. It would be up to the insurer, not FSCO, to give the claimant timely and adequate warning of the potential charge, and to collect the money.

I agree with this proposed provision. However, I'm not so sure it will reduce non-attendance at medical examinations. I predict that many of those legal representatives that advise their clients not to attend will dispute indicating that reasonable notice was given. In some cases I could see a legal representative paying the $500 charge in order to avoid the exam.

5. Strengthen enforceability of the Cost of Goods Guideline by making direct reference to its application in the Statutory Accident Benefits Schedule (SABS)

The current SABS does not include a direct reference to the Cost of Goods Guideline. For enforceability and as a technical matter, the SABS should refer directly to the Cost of Goods Guideline.

I agree with this proposed provision.

6. Make it an unfair or deceptive act or practice to request a claimant or injured person to sign a claim form that has been left blank or incomplete

Insurers report that claimants are at times asked to sign claim forms before the items to be billed to the insurer have been entered. The claimants are often unaware that it is against the rules for them sign what amounts to a blank form. When they do sign, it is easier to exaggerate, misrepresent or fraudulently bill for treatments or for goods and other services without their knowledge. A change in rules would make it a violation under rules governing unfair or deceptive acts or practices to present a blank or incomplete form for signature.

I agree with this proposed provision though I can see it being very difficult to enforce. Let's face it there is no one looking over the shoulder of the facility at the time these forms are completed.

7. Require insurers to include an itemized list of expenses in the benefit statement sent to claimants every two months

The SABS requires insurers to send claimants a benefit statement every two months. Adding an itemized list of expenses to the benefit statement would allow claimants to review specific expenses incurred under their claim and identify any suspicious information. Insurers could also include information about how a claimant can report suspicious activity so that they stop the misuse of their benefits by fraudsters.

I strongly support this proposed provision. I was disappointed to see insurers not properly use section 50 of the SABS when it was introduced on September 1, 2010. The current benefit statements may comply with the SABS but insurers made no effort to use them as a fraud detection tool which was intent of the section 50.

You can also read about the proposed regulatory model for treatment and assessment facilities in Ontario and the amount of fraud in Ontario.