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City of Mississauga


									                                       OFF'ICE OF THE MAYOR

                                                            July 11~ 2008

)\t[r, Willie Handler
Senior J\,1anager
Automobile Insurance Policy Unit
FinancialServices Commission of Ontario
1.5 - 5160 Yonge Street
Box 85
J\,12N 61.,9


Mr. \V-ayne Arthurs
Parliamentary Assistant to  me Minister of Finance
Ministry of Finance
7 Queen ~ s Park Crescent
7:. Floor~ Frost Building South

Toronto, Ontario
J\117/\. 1Y7

Dear Mr. Handier and Mr. Arthurs:

        011 behalf of the City of Mississauga, please accept this submission as our formal
response to the Ontario Auto Five Year Review. The City of Miss.issauga has been 'working
closely with the Toronto Transit Commission c;lr'rC~) and other public transit authorities hoth in
the G-reater Toronto and Hamilton Area (";;GTAII") and aCTOSS Ontario. As a r~~sult, the City of
Mississauga wishes to provide its support for the position outlined in tn\;; enclosed submission
from the TfC!I which is a compilation of comments and discussions with public transit
authorities and-related associations a-CfOSS Ontario.

                             T?'iE C01:iPO~1A1'IO!'J OF 'tHE err\' O~ MIBSISSAUC1A
                            :300CITY CENTRf:: DRIVE MISS1SSAUGA, ON L5B 3C1

                                      TEL: 9(}5"896~W.r-5 FAX: 905"896·5879

        In particular, the City of l\1iss.issa'ug:a takes the position that the Insurance Act requires
amendment so as to provide an exemption fOT all public. transit in Ontario fromaccident benefit
or no-fault legislation. This position is consistent with the submi.ssions made by way of letters
from the CHy of Mississauga's Risk Manager dated January 4, 2002 and October 4~ 2002~ as well
as fborn the former Commissioner of Corporate Services dated June 23, 2003 and from myself
dated J une 23:l 2003.

        The City of J\1ississauga currently operates the third largest municipal transit system in
Ontario servkj~]gapproxiH~ately 30 million riders anrHJaHy.The. City~ s 96 ·l'OUtt:S connect with
the TTC, Brampton Transit, O~kviHe Transh and GO 'Transit stations, In addition, the
iviisslssallgaBusRapid Transit systent (BRT) isprcpcsed for c-Ompletion in 2012 and win
provide further connection to the differerrtttlunidpaHtie.s that comprise tht;;GTHA,

        in recent years it has become apparent that the City has become a target fen' claims with
respect to its transit operatkrns invelvlngelementsef fraud and/or exaggerated injuries and
damages. 'T'ypica] of many urhanmuni.cipal transit systems, the City is self..insured for vii'tuany
all accident benefit claims and bodily inj ury tort claims, ·whkh an; paid direetly fro1T~ municipal
operating budgets, (liven that under the current system, accident benefit claims are payable
regardless of fault, the frequency and severity of these no-fault claims has had a dramatic impact
with annual claims costs ex(~eedlng $1 million annually. In fact, the total incurred (claim
payments plus open claim reserves) of the City' s transit accident benefit .clairns more than
doubled from $1.2 minion in 2004 to $2,8 million in 2007,

         The City of Mississauga takes the position that the current no-fault scheme cannot be
appropriately applied to public transit systems. It is our submission that public transit is
extremely vulnerable under this legislation and is an easy target for acc:idtlmt benefit claims.
Under the current system there is little: accountability on a passenger to submit an accident
bene-itt claim, as they will not be impacted by any automobile insurance rate increase. In
addition, it is very difficult for transit service providers {O transfer these costs into increased fare
hikes, Should accident benefit or no-fault Iegi slation continue to applY to public transit, the
future gro'lr\'th of transit systems across Ontario will be financially impacted by the increased
frequency of accident benefit claims.

        For these reasons as well as those outlined in the enclosed submission from the TTC} it is
the recommendation of {he City of Mississauga that public transit systemproviders be: exempted
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                                                              BILL SA Li'.D E:RCOO ~

                                                              M ICl I-\ E:L THUM I'~O"

  July 11 , 2008

                                                                                                 Direc t Line : (416) 393 -3860
                                                                                               Assistant Line : (416) 393-3851
                                                                                               Dept. Fax No.: (4 16) 338-0 117
                                                                                                  Em ai l: brian.

  Mr. Wayne A rthurs
  Parliamentary Assistant to the
    Minister of Finance                                                           SENT VIA EM AIL A ND COURIER
  Ministry of Finance
  7 1n Floor, Frost Building South
  7 Queen's Park Crescent
  Toronto, ON M7 A 1Y7

  Dear Mr. Arthurs:

  Thank you for your letter of June 3, 2008 inviting submissions from stakeholders in respec t
  of the cur ren t automobi le insurance provisions, We have liaised with representatives of a
  number of public transit authorities from across the province in an ad hoc committee in order
  to determine if the recommendation put forwa rd here is representative of the views of those
  engaged in public transit. and we believe tha t it is.

  Our proposal, and the reasons fo r it, are set out in succinct form below. We would be more
  than pleased to provide further background information and statistics if those are required.
  However, at this time, we have limited ourselves to what we believe is a straightforward
  solution to what has become a f inanci al burden which is developing into an unaffordable
  burden on transit autho rities and those who fund them . Abuse of the provisions of the
  Statutory Accident Benefits Schedule (" SA BS" ) by an increasing numbe r of transit users -­
  particularly in the Greater Toronto and Hamilton area - affects costs for all public transit
  authorities, t heir fare-paying patrons and taxpayers. The problem is developing across the
  province into an issue for all public transit authorities .


  In making this subm ission, we rely on the definition of "pub lic transit service                                                found in
  Regulation 390/05 to t he Ontario Employment Standard Act, viz:

                 " pu blic tran sit " means any serv ice f or whi ch a fa re is charged for
                 t ransporti ng t he public by vehicles o perat ed by or on behalf of a
                 municipality or a local board , o r unde r an ag reement with a muni cipality or a
                 lo ca l board .

   ',_   R fI \(l ll)~WlK
    In addition, we note t hat the re is an enu m erat ed li st of publ ic t ran sit system s in this province
    which is set out on t he Ont ario M in istry of Transpo rt at ion we bs ite and w hich co ul d fo rm a
    sched ule under a Regulation to the Insurance A ct if t he ch ange being proposed in this pa pe r
    is adopted .


    The Toronto        Transit Commission (" TTC") and TT C Insurance Company Limited ("T TCICl")
    propose that      t he leg islation be ame nded so as to pr ov ide an exemption f or all publ ic transit in
    Ontario fr om      ace-dent benefit or no -fault legislation. Instead . we pr opose a return t o a pure
    fa ult system      f or public transit that will require that all claims be dea lt with in a tort-based
    regime .

    Benefits to Users of Public Transit of Such a Chang e

    This proposa l in cludes elimin at ing bo th the presen t ve rba l th reshold and the pre sen t $3 0 .0 0 0
    deducti ble now applicab le t o claim s in t ort whe re acc ident benefi t s are av ailable . Inasmuch
    as public transit veh icles are common carriers , found by the Supreme Cour t o f Ca nad a 1 t o
    ha ve an oblig at ion to use all du e, proper and reasonabl e care and t hat t he care required is o f
    a very hig h deg ree. the re al ready exi st s in law a hig he r dut y upon a public transit system in
    the con t ext of a claim o f negligence or f aul t th an would be placed on ot her mo torists w ith
    w hom pu blic t ransit vehicles are cu rren tly classi fi ed in the SA BS as equiva lent.

    Presen tl y , the public tr ans it t ort pl aint iff enjoys a pr oof -ba sed leniency not ava ilable t o othe rs
    subject to the SA BS. It is not pr oposed that this higher deg ree of duty be lowe red if a pur e­
    to rt system such as is be ing rec om me nded we re ad opte d . Th is f act. along w it h the
    extinguishing of th e $30 ,000 deductible and t he ve rbal t hre sho ld woul d prov ide benefit s t o
    pl aint iff s who see k t o rec over damages in to rt fr om a tr an sit sys tem . Cla imants w it h
    genu ine inju ries an d support able cases in th e area of li abil ity w ould be fairly compensated
    t hroug h th e t ort sys te m. A s in the pas t , th er e w o uld be no " up side " in forcing su c h
    legitima te claimants throug h ardu ous cou rt proceedi ng s whe re th eir cases len d themse lves t o
    prom pt settlemen t .

    Rationales for the Prop osed Change

    Many of t he rat ionales pu t f or ward in f avour of no-f ault ins urance which m ig ht be reaso nab le
    f or pr iva te passenqer-tvpe au to mob iles are un reasonable in t he unique environment of public
    t ran sit. The or iginal theor y su ppo rt ing a no -f ault reg im e had m erit in th at it wa s designed to
    o perat e in a system where tort w as entirely el im inated (and st ill does op erate w ith success,
    In Quebec an d Man it oba whe re tort claims are not permm eo").                  In Ontario, it has fa iled
    utte rly as an attempt to lower costs b y avoid ing lit igation ove r liability and reducing overa ll

        Kau ffm an v Taranto Transit Commis sion , (1 9 60 1 S.C.J . No . 5 (S.C. C. )
    2 There are some rmnc r exc eptions In Manitoba and no ne in Queb ec .

WJ ·
.   "''';''
    costs by providing quick payment fo r injuries (w it h a view to promoting speedy recove ry ) in
    t he public transi t environment. It simp ly does not work . In the case of large u rban cen t res
    and large transit systems, it is com plet el y inappropriat e and has resulted in drastica lly
    inc reased expense for patrons of the system and taxpaye rs in general.

    Not a New Proposal

    From t he beginn ing of th is decade to the present , the TTC and othe r public transit authorities
    have raised wi th representatives of the Government of Ontario t he prospect of exempt ing
    public t ransit from the appl ication of the no- fau lt benefit regime. As f ar back as 2002 and
    2003, the City of Miss issauga wrote lette rs to the Ho nou rable Mini ster of Finance sett ing
    out the issues wh ich were becom ing inc reasing ly problematic for transit systems sin ce t he
    passage of Sill 59 . One such letter from the City of M ississauga dated January 4 , 2002
    stated : "Sim ilar to the Toronto Tra nsi t Commissi on as well as othe r publ ic t ransit systems ,
    the City has bee n a target f or cla ims in v olv ing elements of f raud and /o r exagge rated injur ies
    and damages. Ty pic al of many urban m unic ipal public t ransit systems , t he City is self­
    insu red for v irtually all Accident Benefits claim s and bodily injury tort c laim s wh ich ar e pa id
    directly from m unici pal o perating budgets ... It is our posit ion that public transit should be
    ex empt from th e acc ident benefit legislat ion due to the heav y and unfa ir f ina ncial burde n to
    the City ."

    Unfortu nately , var ious chan ges (m ost espe c ially , the prov isions 01 Bill 1 9 8) have been m ade
    t o the SASS reg im e since 2002 , whic h, overall , have had the effect of inc reasing dubious
    expe nses fo r the users of public transit. In a rep ort dated Jan uary 2008 , t he City of
    Brampton stated t hat 59 % of the 2006 transit c laims related directly to Ontario 's no- f aul t
    in surance leg isla ti on , and that t hese accounted for 82 % of the cla ims funds expended . The
    City of Bram p t on stated th at "t he im pact of the mandatory acciden t benefits on the City
    t ransit in surance premiums and cla ims expe rience has been astronom ical ".               The City of
    Brampton adopted a m ot io n requesting that the Prov ince revi ew the impact on public tra nsit
    of it s no -fault and acc ident benef it leg islati o n w ith co nsiderat ion t hat all pub lic tra ns it be
    exem pt ed from acc ide nt benef it leg islation or alternatively , the creat ion of a m odi f ied no­
    fa ult / acciden t ben ef it reg im e for pu bli c transit .

    Othe r large urban cent re s in Ontario have experienced sim ilar pro blems. In addit ion to the
    City of M ississauga and City of Brampton , Ham ilt on and Yo rk Reg io n 3 have advised of
    serious concern s and hav e expressed a strong des ire to be exe mpted fr om the no-f aul t
    reg ime . They are no t alone. Even public tra nsit systems in nort hern Ontari o (and in easte rn
    Ontario ) have begun to expe rience " pay now (in settlement) o r pay lat er (in assessments )"
    c laim s from local paralegals and lawyers act ing on behalf of SASS claim ant s. OPTA (t he
    Ontario Pub lic Transit Association) and the Ontario Regio na l Committe e of CUTA (t he
    Canad ian Urban Tra nsi t Asso ciat io n), wh ich have o bserv ed t hese effects o ver t im e, also
    supp ort the pr op osal.

            Fo r exa m ple, Y o rk Reg ion , be l o re til e accide nt ben ef its reg ime, an d at its inception, h ad a deductible f rom
    the ir insurers o f $ 5 ,0 0 0 p er cl aim   As t he SASS sch em e to ok h o ld , it becam e necessary t o rai se t hat
    de ductible to $10,000. As 01 this su b m iss io n, it is at $ 100,000 ,00 . T h at is a J_!:IP0J:lEAC ENT increas e - an d
    ab sent some ch ange, it is li kely t o continu e t o rise .


" An\~.
;' 00 1')1 - - - ­
 ' ..... . ...... "j
 'Q;;P                                                                                                                                JoaoNIU
      Toronto Transit Commission

      Below is a cha rt ind icat ing the claims pay m ent s for no -fault benefits , t ort liability and general
      liability (subway and other pro perty) for the years 2004 through to 2007 inc lusive . These
      are amounts wh ich incl ude all claims fo r benefits, dam ages , in t erest , med ica l costs and
      disbursements , and legal costs, related t o the claims in these areas (in mi llions) .

                                                                         TTC Claim Pay m ent s
                                         2004     2005..­                                _                   1200 6                       2007
            .         _ .
              Accident Ben efits - - ­ 1_$6 .4 __ $8 .5
                                                  -       -
                                                                                                              $8 .3                       $10 .4
              Motor V ehicle Tort        $4 .8    $3.8                                                        $3 .4                       $5.1
                 General liability                             $1.9                  $ 1.4                        $2 .6                    $1 .8

      One of th e area s of concern , as di scussed below, relates to the cost s f or medica l
      assessments and medical reports. It should be noted t hat of the no -f ault be nefi ts pa id by
      TTC ICL , over 1/ 3 of the costs relate to medic al assessm en ts and repo rt costs, not inc lud ing
      any amo un ts for direct medical benefits, attend ant ca re benefits. and re habi litat ion expenses .
      T he exp erien ces of the Tor on t o Transit Comm ission are not unique : expe rience across the
      Greater T oront o and Ham ilt on area has been similar.        T he f ollowing are the am ount s
      expended by TTC f or these assessment and report cost s fo r the ye ars 2004 t hrough to
      2007 (in mill ions ):

                                                         TT C Assessment and Report Costs

                                                             I 2",00",,4,---+2005
                                                                                                                 , 20 0 6 .            1200 7
                 A ssessment & Report                          $2 .3                 $2 .7                         $3 . 5


      T he costs fo r me dical assessments and medic al re po rts alm ost dou bled from 2004 t o 2007
      and are ex pe cte d to continue t o rise when t he sta tis ti cs for 2008 are avai lable.


      It is important to examine some basic concepts w ith respect to the no -fau lt benefit regime in
      the context of public t ransit in order to understand the poten ti al for abuse and why public
      t rans it needs to be exempt . The occurrence of an "accident " potentia lly triggers a clai m f or
      various benefits as aga inst the transit in su rer. "Acciden t" is defined , in part, as an incident
      in whi ch t he use or ope ration of an autom o bile d irectly c auses an impa irment. Public trans it
      veh icles (buses, and, in To ronto, also stre etc ars) are captured in the present legis lation by
      the definition of "automob ile " .

                                                                                                                                                                 ,J'   .;

      .l¥J "I
1 , ..~.,"
 ;'     .. .,


                               1' Hil Y(\n~,'
                                    l           ~1 ,,' N ,   Tn,onto, C,,, ,,JJ, ,\ 14S 1L ~   l~ I'.' phnn ,'   4 16-3 0 j -4110D \Veb Sit": I'ow"".tlc. r .'
    An Ind ivi d ua l claiming to be Injured in an accident Inv olv ing a public trans it surface vehicle
    (regardless of whether the transit authority is at fault or even awa re of an incident having
    occu rred ) can pursue a no-fau lt cla im against the t ransit authority if he or she does not own
    an in sured automo bi le, is no t nam ed as a dr iver on anot her aut om o bile po licy, and is not the
    spou se or d ep endent of som eon e w ho owns an ins u red automobile. In some cit ies -- and in
    Toronto in pa rt icular -- there ar e a large number of Ind ividuals w ho do not have access to
    t heir own insurance and thu s are in a pos it ion to m ake a cl aim for accident benefit s aga inst
    the tra nsi t insurer in the event t hey c laim t he y were inju red as a resu lt of an "accident " . In
    add ition , transit authoritie s are reporting incre asing loo sen ess in the inte rpretation of who is
    covered under a po licy such t hat the co st is f or ced bac k onto th e tr ansit system. (For
    in st ance, an " added drive r" on a policy of insu rance is now not required to look to the policy
    in the event of a no -fau lt claim.I

    Given t his, som e majo r distinctions can be seen between the situation in v olv ing private
    in surance compa nies and t heir ins ured s, and the situation involving public transit . In the
    private in surance in dustry, t her e is a first party . This is a named in sured who is party to a
    con tract . He or she has en te red into a contract, in writing , f o r a policy of insu ranc e . Bot h
    part ies en tering int o that agreement have pow er : t he fi rst pa rty can rev iew a number of
    options and choose among them , w hile an ins urer can decid e whom it ins ures. the amount
    of the premium, and can d iscuss various aspects of the policy o r options with it s insureds.
    Insurance premiums are adjusted to add ress cost an d ris k issues to the benefit of both
    parties to the cont ract . It is anomalous to defin e membe rs of an am biguous and un known ,
    constantly chang ing group numberi ng into the millions of per sons as "first part ies" . The
    term "first par ty" in the in surance conte xt suggest s the "first party " is a know n entity who ,
    having wei ghed risks and benef its, has ente red into a contract . T hat is not true with public
    t rans it rider s.

    No Contra ctual Relationship

    T he tru ly con tr actual nature of priv at e insurance ha s led to economic benefits to pr ivate
    Ins urers . T here is a recogn ized reluc t ance on t he part of the ir t rue "first parties" t o pursue
    c laim s - some f rivolous, some not - for fea r t hat thei r con t ract of insurance will be subject
    to revision upo n renewal , o r w ill be cancelled alto gether.

    It is not uncomm on fo r a pe rso n w ho attempts to advance a claim again st a t ransit autho rity ,
    upon being adv ised t hat he or she must make a no -f au lt claim to his or her own insurer , to
    recover prom pt ly fr om his or her com pl aints such th at no claim is made . It is also not
    uncommon fo r per sons t o mislead tran sit aut horit ies by c laiming to be div or ced f rom po lic y
    ho lde rs to whom t hey are st ill mar ried , or claiming no t to have any form of available
    insurance when they do . Transit authority ad just er s are caused to expe nd considerab le time
    and expense to review the in surance status (as far as it can be det er m ined ) f or claimants.
    These are not situations faced by those insu ring private drivers , aware of the inherent ris ks
    of ma king fr ivolous or bogus c laim s.      In additio n, private insurers f ace no issue in
    determin ing whether or not a person is a fi rst party to the ir contract w h ile for pub lic transit ,
    it is a constant st rugg le.


; .t'JU. I.         _
    ·· ·~/"· ~
 ~                                                                                                       IDBIINIO
The transit business is unique - com ple te strangers are deemed to be par ties to a contract
and thus insured from the moment they beg in the process of boarding a t ransit vehicle .

T ransit autho rities operate vehicles of ma ss transit in which there is a com plete arms-length
re lationsh ip to custom ers, each of whom by virtu e of the no -fau lt system is a potential
"insured " cl aimant. In an id eal worl d , tr ansit autho rities could t rust each an d every rider
advancing a cla im but expe rience has shown this no t to be t he case .

No Deterrent to Claiming

The pu blic t ransi t au thority is unable t o inc rease p remiums (ot her than by fare inc reases
wh ich impose the burden - unfair ly - across all ride rs and/or ta xpaye rs ). There are no
premium consequences f o r ind ivi duals w ho may make re pe ated cla ims , question able or not .
T hese cla ims can be ma de repe atedly without proof of neg ligence of any type on t he part of
t he t ransit author ity, all aris ing f rom the payment of a passenger fare .

Given the defin itions of "accident" and other term s un der the no-f ault benefit legislation ,
tra nsit companies are particu larl y v ulner able to fab ric ated and ex agge rated cl aim s and ab use
of proce ss b y c laim ants. Claim s often include alleged injury caused by minor falls or bum ps,
by twists or turns at v arious loc at ions on vehic les, inc lu ding in the aisles while holding on to
stanch ions, or entering or exiting vehicles, o r even being jo stled in the ir seats , all of which
are cla ims arising from the "use" of the vehicle . Even a person who wal ks into the side of a
bus is deeme d t o have been affected by the "use or operat ion" of the bus . Eac h o f t hese
"accidents " is a potential opportunity t o adva nce a cla im , reg ardless of whether or not the re
is any ne gligence on the par t of the publ ic tr ans it authority .         M an y of t hese no- faul t
"accidents" are largely beyo nd the purvi ew of risk control efforts inst ituted by the publ ic
transit autho rity.

T here is often a lack of subst antia l, co rroborating evidence of a "re al " acciden t , other th an of
course , the ins ureds' descr iption . T here is no strict du t y to report an incident to the publ ic
trans it au tho rity or police at the t ime of the incid ent occu rring. Repo rt s may be rece ived
days lat er , many time s w ithou t a d river hav ing any know ledge of the inc ident . Nonetheless,
the t ransit authority has an obli gation of good fa ith and there are very short t im e constrai n ts
with res pect to response f rom the ins urer . In thi s situation it may not be difficult fo r a
claim ant to "get into the system" with a dub ious c laim . Once ins ide th e sy st em , the cycle
of costs for the insure r of the t ransit autho rity begins .

It is no t uncommon to have mu ltiple cla ims from the same indi vidua ls, or the ir re lat ives .
Also common are situ ations wh ere one f am ily m ember -- afte r his or her claim is settled .­
becomes the " paid attendant" or "house kee pe r" under t he SA SS f or another f am il y member
who lat er advances a fresh c laim . In or der to advance a c laim th at one was injured on a
vehicle , often one need have very litt le more information th an the locat ion of an accident
in v olv ing a public tra nsit vehi cle or a vehicle number , bot h of which are plainly avai lable
through wo rd of mouth , through the media, through observat ion of passing veh ic les , all
creating opportunities for tho se who would seek out the opportunity to make frivolous
claims . In fact, none of thi s is required. A person can simp ly assert that he or she fell or
was inj ured on a public transit vehicle with no inf orm at ion other tha n the rou t e in order t o


cause the investigat io n of a claim and the rise of the strict timel ines (im posed rigo rously on
In surers -- at the same time t hat the time lines im po sed on insured s are all subject t o
re laxat ion ).

Difficult Risk to Underwrite

It is ob v ious then that public transit authorities and their insurers are particularly vu lne rab le
to fabricated and exaggerated soft tissue and psychologica l cla ims as well as staged
acc idents . They are freque ntly drawn into t he unwie ldy and ex or bi t an t ly co stl y no -fa ult
regime, in very quest io nab le c irc um st anc es. There is an extrem ely expensiv e and elaborate
system of medica l fees and assessme nt costs for what appear t o be min or soft tissu e
inj uries. T hes e assessments often in vo lve a mu lt i-discipli nary tea m of experts (psyc hi at rist s,
o rt ho paed ic surgeo ns, ne ur olog ists and ot her m edic al exper ts ). Ma ny of those defend ing
these cla ims have diffi cul t y accepting that t he t yp ical alleged injury aris ing fr om t he
situations m entioned above should rou t inel y require the full gam ut of medi cal consu ltations,
assessments and treatme nts, inclu ding typ ically physiotherapy , m assage, chi roprac t ic,
orthopaedic , neurological and psy cho logi cal expertise .

T here are in st ances where the medical costs asso cia ted w it h a m inor soft -t issue injury fro m
an alle ged bump aga inst a pole, o r jo st ling in a ve hicle , have cost te ns of t housa nds of
do llar s - and th is is simp ly on the m edic al side w here a sizeable and quest ionable array of
clin ics operate w ith a vested int ere st in assessing clai mants as in need of t reatment ." We
are conce rn ed tha t t here may be " arrangements " made with th ese " cli ni cs" for "fee sharing "
with the alleged ly injured party , or his o r her legal agent or any par ty w ho m ade the ref erral.
A nd, of course , m ed ical incapac it y then supports cla ims for a v ariet y of ot her bene fits such
as inco m e rep lacement , non-earner benef it s, housekeep ing, attenda nt care, and the like. In
order t o de ny these cla ims , the insurer has to incur massive cost s of assess ing t he cl aim ant s
not only f or t he insur er' s purpose , but also has to fund the assessments the cla imants obta in
to coun t er the in surer' s exam inati on (t hi s latter situation cam e into law with the passage of
Bill 19 81.

~   Perh aps t here is no be tter in st an ce of th is t ha n a sit uat io n which occ urred on the TT C' s Da w es Ro ad bus in
200 3 .    A t ip to th e To ro n t o Poli ce Ser vic e in t h e for m of a vi deo t a ped stat ement adv ised the m one d ay in
eavence     of an ac c ide nt w hich w as to o ccu r on a Sunday eveni ng wh en a U -Ha ul t ru ck would m ak e a mino r
im p ac t w ith th e re ar of a TTC ve hi cl e. T he in cid ent d id occur. The bus, w hi ch nor m ally carri ed abo u t 4 0
pe r sons. on this da y carried 8 0 . After th e ac c ide nt, approxi mately 4 0 p ers o n s si mply to ok the n ext bus and
were not hea rd frorn ag ain ,           Ho w ever, the other 40 claim ed inj ur y requiring am bul a nce s an d h o sp ital
ex aminat ions. Virt u all y all w er e from t h e same area of t he ci t y wh ic h w as nowh er e n e ar Daw es Road and the ir
exp lanations o f why t hey were on t h e bus were con flict ing and illo gi c al. De sp it e ttus - and this is th e critical
fact - by the Tue sd ay morn ing after that ac cid ent. t h ir ty- five all eg ed " me di c al pr ofe ssion als" h ad found th ese
person s d isa bl ed a nd in ne ed of tre atment - tr eat m ent t o b e pro v ided at the t ra ns it com pany 's exp en se by th e
sam e p rofe ssion als who co mp leted th e f o rms . Not on e 01 the se cl aims w as accep te d , an d no t one of t h e
alleg ed ly inju red par t ies pursue d their cla im o nce the story of t h e fr aud broke in t h e m ed ia. No one can say
how many of th ese ca ses ex ist beca use only due to th e c onscience of an inf o rm er involv ed in th e sch em e w as
th is on e uncov ered.

    Sin ce tha t t im e, t h e "i ndustry " o f med ic al c a re pr o viders who ben ef it from a fin di ng that a claimant needs
tre at ment ha s grow n q ecrn et ncallv         Indeed, it is commonl y th e c a se tha t a c lai man t w ill be refe rred to
"thera py" no t by hi s or her docto r, bu t by a legal ag ent or by a special "a ccid en t d o ctor " .
                                                                                                     p 'J" 7

These t y pes of allege d soft t issue inju ries and tile infrastructure su rrou nding t hem in the no ­
fau lt regime are generating eno rmous and ofte n unwa rranted medical an d legal costs . A
simi lar bump , trip or jo stl e which occu rs ou tside the un iverse of the no -fa ult insuranc e
reg ime , such as in cidents in one's own backyard or home or eve n on a subway , certa in ly do
not seem to generate t he same deg ree of med ical attention and costs - if they genera te any
at all. Studies in v olv ing soft tissue injuries aris ing in coun t ries w hic h do not have rich and
ext ensi ve com pensati on systems, suggest tha t hum an beings are reasonably hardy and
resilient , and can actually recove r extremely qu ickly from t hese types of injuries. Two
separate stud ies in l ith uani a conc luded t hat, wit hout in su ran ce, in v olvem ent of the
therapeu ti c commu nity , lit igation , and pre-conceived not ions about whiplash , the sympto ms
of acute w hiplash are self-lim iting and brief. Further , chron ic w h ip lash either d id not exist or
was rare.       Pub lic t ran sit autho rit ies ope rate large, extremely safe vehic les capable of
withstanding major impacts at times without persons on the bus or street car even know ing
th ere has been an im pact until after it is over . Give n that Onta rio's heal t h care system has
diffi cu lty promptly tre at ing everyone who has a genuine, ser ious illness or injury , it is worth
re assessing t he social costs, benefits and impact of the no-f ault leg islat ion in the con text o f
t rans it. At the end of the day, t he ta xpaye rs fund our he althcare system, an d in the case of
pub lic transit, also f und the inflated costs of the pr ivate cl in ic system w h ich has prolif erat ed
Since the passage of no-fa ult legi slati on and never more so than since th e passage of Sill
198 .

Separate Claims Handling Requirements

Another co stl y effect of t his system is that in all of t he no -fa ult cases , separa te files and file
ha ndl ing m ust be established f or t he SA SS and tort fi les. The staff and administrative costs
in handling t hese claims separately from one another further impacts t rans it o pe rat ing
budgets .

Th e Folly of Hoping for One Result white Rewarding Another

Under ly ing th is subm iss io n is the indispu table f act that the dramat ic inc rease in costs
experienced by publ ic t ransit systems is funded by public do llars. Publ ic t ransit autho rities
w ho purc hase insuranc e f rom private in su rers have seen deduct ibles incr ease t o t he point
that m ost of the cost of the SASS is c arr ied by the publ ic trans it system - wh ich means by
it s rid ers and all taxpayers.

The Province has mandated growt h of pub lic t ransit in o rder to improve the environmen t and
t he qua lity of lif e in Ontario . Provinci al f und ing f rom su ch sources as the gaso line tax cannot
be utilized for "capita l development " if the system has become, to some extent , a revenue
gene rato r for cl ai m ant s and the various in du st ries that suppo rt the m . Should t he ec onomi c
dow ntu rn in Ontario cont inu e, it is only reaso nable to expect that there w ill be inc reased
in t ere st in t he "easy money" ava ilable by mak ing cla ims against a pub lic trans it auth ority. At
th e same tim e, as gas pr ices increase , public t ransit ridersh ip , w hic h ha s already bee n
gr ow ing st ead ily , is expected to gr ow eve n more.                 Cap ita l ex pan sion and serv ice
im pro vem ent s w ill be necessary t o meet inc reased demand - but it li ke ly also wi ll lead to an
Inc reas ing n um ber of cl ai m s f ro m abusers of t he SA SS. The co st of fr au dulent cl aim s may
w ell out strip th e revenue mc rease assoc iat ed w it h increased riders hi p , pa rt icu lar ly g ive n t hat

                                                                                                          - IDBONID
   some sizeab le port ion of the increase has been attracted by eff ecti ve fare red ucti ons , suc h
   as revised ru les on the use of passes , and in some cases , free pub lic transit. One m igh t
   wonde r if there wi ll be funds available fo r the sorts of serv ice im pro vem ent s the Prov ince
   w holeheartedly supports if the current SA SS system continues to dra in resour ces fr om
   publ ic transi t .

   Th e no -fau lt system hinde rs public tra nsi t auth orities and the provinc ia l government from
   meet ing the goal of off ering an economi cal , reasonable and efficient t ransit system .
   Unfortunately, the no -fau lt syste m creates an impedime nt t o t he exp ressed goals of all
   part ies in Ontario wit h regard t o public transit.

   Ref errin g bac k to the rationales f or no-fault , they have not be en borne out . Claims' costs,
   and, in part icu lar, med ica l assessments , reports and other relat ed co sts have soared .
   Likewise , li abilit y has not bee n el im ina ted or reduced as an issue . The verba l threshold has
   been dramati cally weakened over the years as a result of court int erpret ation. The t hr eshol d
   applies strictly to general damages, and ot her cl ai m s such as econ omic lo ss cl ai m s may
   pr oc eed in tort regardless of the extent of t he threshold and the exten t of the inj ury as a
   result of Bill 198. There is th us a t rue benef it in build ing a m assi ve SASS clai m In o rder t o
   m ove the excess over into a tort c laim . Thus liab ility is a live issue in v irtuall y ev ery personal
   inju ry c laim .

   Other Issues with the No-Fault System in Ontario

   Qu ite apart f rom the need to exempt public trans it, there are a num ber of ongoing difficu lties
   with the no-fault regi m e in Onta rio . Some of t he major problems include the f ollow ing:

        •	    Med ical fe es and assessment costs are no longer capped by FSCO ;

        •	    T he medi cal rep ort and assessmen t syste m , in v olv ing in iti al med ica l assessment ,
              rebu ttal assessment/ report , rep ly to rebu ttal assessm en tlrep o rt is now all at the
              in surers' ex pense, and is of questionab le va lue;

        •	    Cla imants are able to iso late separate be nefit cl aim s and proceed w ith repeat ed and
              separate me d iati on s and arb itration s -- all at the insurers' expens e;

        •	    Th e c rit eria fo r catastro phic assessme nts have been substant ially weakened as a
              resu lt of Co ur t and FSCO arbit ration de cisions. Catast roph ic determ ina t ions res ult in
              substantially enhanced benef its for a c laim ant ;

        •	    Cla imants are ab le t o isolate separate benefit c laim s for purpos es of o bt ainin g med ica l
              reports (f unded by insurer) and t he purpose of arbitrating each one at the Insu rer s'
              ex pense, th us inc reasing the insurers' overall on going costs, wi t h a view to
              pr essu ring a settlement of t he case;

        •     Even m inor injur y c laim s can now result in a requisit io n t o the insur er f or a
              cat ast ro phic assessm ent . These assessments oft en can cost bet ween $20 ,000 t o

, "' .(1 ,
 I . lU \.'
"'~	                                                                                                         IDRDNID
                          $30 ,000, in v olv ing a multi -di sci plinary t eam of pro f essional experts (psychiatrists ,
                          orthopaedic surgeons , neu ro logists , an d other medical experts);

                   •	     Pu blic t ransit autho rities or their insu rers are unable to settl e any SASS claim wi thin
                          the fi rst ye ar of accident ;

                   •	     Public transit authorities or their insurers must have a me dical report to deny bene fits
                          (surve illance , in v est igat ive evidence alone is not sufficient);

                   •	     The verbal thresho ld in tort has been dramat ically weakened by Court interpretation ;

                   •	     T he th resho ld in tort ap plies only to genera l damages ~ various other cla ims , such as
                          econom ic loss st ill proceeds in to rt without reg ard to any threshold; and

                   •	     A claimant can arbi trate each treatment plan (for exam ple, claimants can come back
                          f o r 10 ye ars post -ac cid ent with new t reatment plans each of which can cost
                          t ho usand s of do llars t o assess) .


        Different types of no-fau lt regimes exist in different pro vinces and states, with d ifferent
        levels of benefits, timet rames. and cond itions, and thus it is difficult to compare directly . It
        should be noted , however, that unt il recently New f ound land & Lab rador had a no-fault
        sy st em which appl ied to public t ransit vehicles. The no-f au lt system w as then disca rd ed ,
        an d no -fault was provided as an option un der a polic y , thus render ing it inap plic ab le to public
        t ransit . Tran sit systems in Newfound lan d & Lab rado r are now in a strict tort reg im e, and
        this ch ange ha s res ulted in a subst ant ial d rop in the overall claims payments . The Pro vince
        of A lbert a has a pure to rt regime in the transit env ironment.

         In the Un it ed States, in the few states which st ill have no -fault systems , in most cases
         pub lic transit is exempt . In a ve ry few are as whe re there is some no-fault coverage available
         (and it must be remem bered t hat in the USA , there is no universal healthcare , w hich has
         been a rationale for reta ining some form of no -fault w her e it exists) , the re are ve ry strict
         financial limits and those lim its are st rictly enforced.

         Th ere is no suggestion in the United States that there is fundamental unfai rne ss in treating
         tr an sit riders who do not have insurance di fferently fr om those who carry t heir own. The
         distinction between public t ransit and automobiles is based on the public nature of t he
         bu rden for t ransit au thorities and not on the flawed log ic that all conveyances whic h move
         on whee ls must be trea ted exactly alike . The latter reasoning , wh ich presently preva ils in
         O ntario , suggests that persons travell ing on a bus on public roads have greater rights than
         persons paying exactly the same fare but t ravell ing on rails in a tunnel. Each year in Ontario ,
         hun d reds of persons are injured in bic yc le accidents , either between two bicycles , or
         between a pedestr ian and a bicycle. T here are no ac c ident benefits avai lable to them . The
         dete rm ining factor of whether or no t a person can be covered by a pol icy of insurance as a
         first party should be , as it generally is other than in a public t ra nsit no-fault situa tion , the

:.\ ,,;,.. ~. ,..;.. !.
  ~ '
                                      1'J oo Yongf' STrf''':, Toro r lo , Can ada , •...145 1Z2 T,'I"pho r.f' 4 16·393 -4000 \\'<'1 S,t<' , www ll< .',1
   dec ision of tha t person t o become a party t o a co ntract of insu ranc e and pay the pr ice f or so
   doing ,	 or ado pt th e risks of not do ing so and allowing th e tort sys t em t o operat e t o make
   t hem w hol e , shou ld inj ury occur .

   In sho rt. t he no-fa ult syste m is not wor king , an d in par t icu la r is not working for public
   t ransit. A recent art ic le sh ould be not ed wit h respec t to t he sit uat ion in New Yor k State
   (and part icu larly New York Ci ty). w hi ch exem plifies t he potent ial seriousness of the se issues:

               In at least on e state, New York , the no -teen p la n suddenl y and
               unexp ect edly led to an enormous flood of litig ation beginning aro und 19 95
               and contin uing unab at ed to date (2 0 07). As documented by the New York
               State Insu rance D ep artm en t and b y N ew York Court of Appeals, a billio n
               dollar a yea r "no- teutt fraud industry" has emerged, in w hic h larg e numbers
               of peop le ... are r ecruit ed by " criminal rings " . Th ey are " then in volved in
               de libe rate or "stag ed" acc idents.        The " victim s" are then referred to
               compliant "m edic al c lin ics " w h ic h supp ly unnecessary, questio nable or
               redundant treatment and/ or m edic al supplies. Medica l bills are sent en
               ma sse to no-fault insurers and w hen payment is denied a suit I S
               commen ced b y a number of la w f irms which apparently sp ecialize in j us t
               this kind of claim ... n o-faul t litig ation is reported t o constitute 2 5 % of all
               la w suits f iled in N e w York Cit y Civil Court .


   To summarize . the no -fa ul t syst em is not w orking fo r public t ran sit.        All the fo re going is
   su bm itted in su pport of a prop o sal t o :

        1)	      exem pt publ ic tra ns it (as present ly def ined in Ontario ) fr om t he SABS reg im e;

        2 )	     ret urn bod ily inju ry cl aims arising f rom t he use o r operat ion of su rf ace vehi cl es
                 o wned by pub lic t ransit autho rities t o a pure t ort reg im e;

        3)	      elim ina te the verbal t hres ho ld as a ba r to making a claim in to rt invo lving publ ic
                 tra ns it now subjec t to it ;

        4 )	     elimin ate the m onet ary thresho ld (the $30 ,000 deductib le) as a bar to maki ng a
                 c laim in tort ag ainst pu blic trans it now subject to it .

   Th ank yo u ag ain fo r allowing public trans it auth or ities t his oppo rtun ity t o prese nt our view s
   as yo u co nsider t he existing legislation and proposed changes t he re to . We wou ld be pleased
~' ~,o . "'''0 .' comment s or respond to anv ",,'0.                                               "0 m. ht
   _~                1~/L
   Brian M . Leek
   Genera l Co unsel

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