By Ian Burns for The Lawyer's Daily
Several lawyers organizations are raising the alarm about the B.C. government’s changes to the provincially owned Insurance Corporation of British Columbia (ICBC), with one group even saying the changes may not pass constitutional muster.
In January, automobile insurer ICBC posted details about its third-quarter fiscal situation that showed a net loss of $935 million for the first nine months of the 2017-2018 fiscal year, with projections showing ICBC will post a net loss of $1.3 billion for the entire year. In response, Attorney General David Eby called ICBC’s finances a “dumpster fire” and vowed to get its books in order to prevent a massive increase in premiums.
To that end, Eby revealed a number of proposals in February to change ICBC, with legislation being formally introduced last month that includes a cap of $5,500 on minor injury claims, an increase in accident benefits and sending some matters to the province’s Civil Resolution Tribunal (CRT). The legislation, Bill 20, called the Insurance (Vehicle) Amendment Act, passed third reading May 10.
“[The legislation] is about doing what’s best for B.C. drivers, both in what they pay for insurance and in making sure they get the best coverage if they’re injured,” said Eby when introducing the legislation. “For years, B.C. drivers have had to pay more and more simply to cover the spiralling legal and administrative costs at ICBC. We can’t right the past, but we can put ICBC back on track to deliver more affordable rates and better coverage for drivers moving forward.”
But Bill Veenstra, president of the Canadian Bar Association, B.C. Branch (CBABC), said the government is decreasing accountability and saving money on the backs of people who are injured in motor vehicle accidents by implementing the caps. The CBABC has released a position paper outlining the organization’s concerns with the legislation, arguing caps result in a bureaucratization of justice with rights prescribed by legislation that, in most circumstances, reduce the level of compensation available for innocent accident victims. It also argues evidence suggests there is no significant difference in the cost of insurance to the consumer between those jurisdictions that have some system of no-fault insurance and those that do not.
“Instead of having courts determine what the appropriate compensation is for pain and suffering based on decades of jurisprudence and general notions of fairness, they’re picking a number and if an individual falls within a definition of minor injury they’re going to be restricted to that number instead of the number that is fair based on decades of precedent,” he said. “[Caps] are actually punishing the people who are victims instead of trying to find ways to reduce the incidences of the accidents.”
The Trial Lawyers Association of British Columbia (TLABC) has gone one step further, saying it believes the legislation is unconstitutional. It argued the caps infringe on the equality rights of injured people.
Specifically, the TLABC believes that injured people are disabled within the meaning of the equality rights provisions of the Charter of Rights and Freedoms and are therefore protected from discrimination by the government, so the changes go so far as to target a certain class of disabled persons for “uniquely disadvantageous treatment.”
“Our members are deeply concerned for British Columbians and their rights, which are being sidelined in favour of a quick fix to ICBC’s mismanagement problems,” said TLABC president Sonny Parhar. “From our perspective this is a rash and ill-conceived plan that is focused on covering up ICBC’s own ‘dumpster fire’ and will only serve to make injury claims much more challenging for those injured in collisions.”
Concerns have also been raised as to what constitutes a “minor injury.” Bill 20’s definition excludes injuries that result in a “serious impairment” (defined to mean an impairment that is not resolved within 12 months), but includes abrasions, contusions, lacerations, sprains and strain, pain syndromes and psychological or psychiatric conditions.
Veenstra noted the legislation is vague on this point and leaves it to the government to pass a regulation to set out in detail what minor injuries are. He noted people can have significant long-term impacts from some of the conditions mentioned, especially with regard to psychiatric issues.
“We know from experience in looking at cases that the courts have considered these are in no way minor injuries,” he said. “They’re making something minor that would have historically not been considered in that way, and the people who suffer those injuries often have their lives changed dramatically by them and will be limited in compensation to $5,500.”
The government also passed separate legislation, the Civil Resolution Tribunal (“CRT”) Act, to amend the powers of the CRT to allow it to consider automobile insurance cases under $50,000, as a means to resolving the cases more quickly than would happen in the courts. But the CBABC has also raised concerns about the independence of the CRT, which is appointed by the government and report to the Attorney General, as does ICBC.
“The lack of independence is a major concern given the significant jurisdiction they’re being given, and the elimination of any kind of effective review of their decisions,” said Veenstra. “There used to be a right of appeal of [the CRT’s] strata property decisions, but that’s now being eliminated and there’s a limitation on any right of judicial review to only circumstances where a decision is patently unreasonable, and that’s a standard that’s extremely difficult to meet. There’s basically no effective oversight from the courts of the decisions of the tribunal.”
Ron Nairne of GN Law, a personal injury lawyer who also serves as co-chair of the TLABC’s ICBC committee, noted the government is allowing individuals to bring lawyers before the CRT, but said many may not find it economically possible to do so.
“ICBC will be represented by a professional [before the CRT], maybe not a lawyer but certainly someone who has far more access to all the mechanisms of this process than what an individual does, so they know what to do and how to present their case,” he said. “But meanwhile the person who is appearing before the tribunal is likely going to have less will to move forward, and is much more likely to be rolled over. It’s just disastrous.”
Veenstra said the government needs to focus on the “root causes” of the expenses that ICBC is being faced with rather than implementing caps and directing cases to the tribunal.
“They need to focus on improving the existing process through our courts and find ways to reduce the costs, and we’ve certainly offered to work with them on that,” he said. “And in particular people are concerned about the ever increasing amount that is being spent on expert reports and the demand for more of them. That’s an area that should be examined, and there needs to be more effort put into figuring out where dangerous driving behaviours are occurring and amending the premium model to make sure those people pay more.”
In a statement, Eby said the government “will no longer tolerate having British Columbians’ car insurance premiums pay to administer costly and lengthy lawsuits with multiple experts in B.C. Supreme Court for minor injuries.”
“We will no longer permit endless growth in ‘pain and suffering’ awards for minor injuries that have increased more than 260 per cent in just the last 10 years,” he said. “While these changes may be controversial for those who have benefited from the existing broken system, they’re not new. Every province in Canada has taken steps like this to get minor injury costs under control.”
Eby said the changes translate into savings of more than a billion dollars each year. He said ICBC’s material damage cost reached $1.7 billion in 2017, and collision repair is the largest component. In 2017, ICBC paid more than $700 million to collision repair suppliers, up 50 per cent since 2012.
“The situation is not sustainable. That’s why we’ve been looking at these costs carefully,” he said. “The reforms we make today will ensure ICBC is efficient and delivers affordable car insurance with good benefits for British Columbians for years to come.”