01 Apr ICBC’s Open Part Seven File Policy Supports Unionized Employees
There’s less ICBC work, yet more unionized workers being hired.
April 1, 2019 spells the date upon which 80-90% of all ICBC injury claims are likely to be severely restricted in terms of compensation with a cap on pain and suffering at $5500. If all goes well for the NDP government, tens of thousands of files each year will settle out very quickly when the claimant realizes the injury claim is almost worthless. Claimants stuck in the “minor injury” category will have difficulty finding lawyers to help them with their claim given the low value of the claim. Basically, the claimant will be at the mercy of an ICBC adjuster who will likely push hard to settle the claim early.
With the early closure of tens of thousands of files each year at a low cost, one would expect that the number of unionized ICBC employees would plummet over time yet ICBC has been trying to add hundreds and hundreds of new adjusters in 2018 in anticipation of the new system. Why is the NDP government adding huge staffing of unionized employees to deal with a system which is supposed to be quicker and less costly than the old system? Should it not be the situation where many unionized employees will be laid off?
The political answer to how the NDP government would stick handle the need to maintain a unionized workforce was released in January 2019. To everyone’s surprise, ICBC suddenly introduced a new policy in January 2019 which admittedly, many adjusters at ICBC were left scratching their heads wondering why ICBC’s management and the NDP government would do such a thing. Simply put, it makes no economic sense whatsoever to leave part seven files open indefinitely.
Historically, whenever an individual settles his/her ICBC injury claim, ICBC would always settle the part seven claim. Part seven benefits are medical and rehabilitation expenses as well as temporary total disability benefits available to all injury claimants regardless of fault for the accident.
If one runs a business in the real world, keeping files open indefinitely is a bad idea because it invariably results in having a liability on the books not to mention the need for extra staffing. So why would ICBC leave all these claims open-ended? Do they believe that people simply won’t use part seven benefits after they settle their injury claim and therefore, by not cashing out the future care claim they will save money? Is this an attempt to undermine the ability for plaintiff lawyers to bill fees on future care? Is this a Mr. Nice Guy approach to ensure that everyone has reasonable treatment for their injuries? Is this really an attempt by the NDP government to give back to its union supporters in the form of guaranteed jobs?
In my respectful view, this is clearly an attempt by the NDP government to line the pockets of unionized workers at the expense of plaintiff lawyers.
In Ontario, which is the leader in insurance in Canada, back in the 1990s the Ontario government changed the tort system while leaving open their equivalent of part seven claims. The end result was that the number of open files in Ontario ballooned to a point where it is now common practice in Ontario to “cash out” no-fault (part seven) benefits in order for the Ontario insurance companies to close files. Indeed, many plaintiff lawyers and medical experts make a living in this area because of the need for the Ontario insurance companies to close files. Otherwise, keeping all these open-ended files alive made no business sense to the Ontario insurance companies.
So how is this new policy of leaving part sevens open after settlement going to work for ICBC? The statistics show that ICBC settles over 30,000 injury claims in 2018. The average front line adjuster at ICBC, who is a union employee, is able to run somewhere in the range of 200 to 300 files. Now, all these injury claims are no longer being closed completely and taken off the workload of the union employees. A simple math calculation is that ICBC will have to add a minimum of 100-150 new unionized ICBC adjusters each year just to maintain all these open files because the closures are just not happening.
Now of course ICBC is going to suggest that the policy was introduced to ensure that injured parties get “the care they need”. However, we all know that ICBC adjusters take great pleasure in cutting off benefits to injured parties relatively quickly after an accident so is ICBC really going to generously pay care indefinitely on all claims? Simply put, and taking a card from Andrew Weaver’s playbook, expecting ICBC to suddenly be generous on paying part seven benefits is a “unicorn” belief.
Part seven claims remain open if there is an active lawsuit or so long as the adjuster pays any expense under part seven over the last two years. That is, the limitation period for a part seven claim ends two years after the last payment by ICBC under part seven unless a lawsuit is filed or a statutory notice is given to ICBC. In other words, it’s pretty easy to keep the part seven claim open for decades. Therefore, as long as a claimant is being active in pursuing treatment indefinitely, the file remains open forever. In turn, the cost of an open file for this length of time is staggering comparative to the small amount of money that ICBC could have thrown into the settlement to close out part seven benefits.
Before this unusual policy was put in place in early 2019, thousands of files were closed out each year with minimal payment of future care benefits. There is not one economist in Canada that would say that leaving longtail liability files open for potentially decades is more cost-effective than paying out a small allowance for future care to close out the exposure forever.
The other potential benefit to ICBC leaving part sevens is it invariably hurts the lawyers that pursue injury claims against ICBC. The reason I say that is because most contingency fee agreements do not exclude the lawyer from having to pursue part seven benefits on behalf of the claimant. There is also a line of cases that indicate that if the lawyer does not pursue the part seven benefits then the lawyer loses his/her claim for any legal fees at all. Basically, the law firm is forced to keep the file open and active despite the fact that there is real no compensation coming to the law firm for the extra work to administer part seven benefits with ICBC indefinitely. In other words, not allowing files to be closed out at the law firm has a server drag on the profitability of plaintiff law firms.
In summary, this new policy is nothing more than an attempt by the NDP government to ensure that unionized employees at ICBC are employed for years to come. To a lesser extent, this is a deliberate attempt to undermine the profitability of plaintiff only law firms by forcing them to keep open files of no economic value where the lawyer cannot receive any compensation for years of additional service. Like the construction industry where all public works need to be completed by NDP favourable unions, this is yet another example of paying back NDP’s unionized employees for votes that helped bring them to power. Simply put, there is no other logical reason behind ICBC keeping tens of thousands of files open each year instead of paying out a modest amount at the time of settlement to close the file.