Law Times

PAGE 8 An online resource 1.800.263.3269 Focus On PERSONAL INJURY LAW Alternatives sought as insurance runs out Changes to auto coverage leaving some injured people with inadequate funding BY JUDY VAN RHIJN For Law Times many lawyers to anticipate the downloading of claims onto the torts system. More than six months later, with the effect of the lower limits starting to bite, lawyers are looking for ways to bridge the funding gap so their clients can reach their optimal level of recovery while they wait for their cases to mature. Dale Orlando of McLeish T Orlando LLP and current president of the Ontario Trial Lawyers Association, says most people are still in the transi- tional phase as the changes take effect on the renewal of policies up to Sept. 1, 2011. "I haven't got any clients who have run out of money yet, but it is a near certainty in the near future, particularly with atten- dant care, which gets used up pretty rapidly, and for those who are unjustly put into the minor injury category." In that category, the limit on medical and rehabilitation benefits is $3,500 regardless of whether the policy owner has optional coverage or not. Greg Monforton, a personal injury lawyer in Windsor, Ont., expects to see a lot of situations where people meet the threshold for serious and permanent injury but still fall under the minor injury classi- fication. "This would include injuries like incomplete rotator cuff tears, ligament and muscle tears," he notes. Laura Hillyer of Martin & he radical revision of auto-insurance entitle- ments in September led Hillyer Associates in Burl- ington, Ont., is also appre- hensive about the exhaus- tion of the lower limits. "I can see it coming," she says. "People are going to struggle in the immediate aftermath when the primary goal is to get people back to work or functioning independently." Hillyer believes the short- fall in benefits will detrimen- tally affect cases involving moderate injuries require need long-term treatment. "There are cases where the acute phase can last a long time. There have been a lot of people who need a lot of re- habilitation and medical sup- port who benefited from the higher limits. For instance, someone may return to work but may desperately need massages to cope. If they can't access them, they will stumble physically in the workforce." Orlando is concerned about people who are seriously, but not catastrophically, injured. "The majority of people in mo- tor vehicle accidents thankfully have relatively modest injuries for which $50,000 of medi- cal and rehabilitation benefits and $36,000 of attendant care should be sufficient, but 20 per cent will suffer seriously but not catastrophically. When you consider that all the assessments before treatment come out of the $50,000 first, you can see that they are really going to feel the brunt of the reduction in benefits." As a result, Orlando is worried that these people won't have the same outcome as they would with continued care and treatment. 'Certainly, there's an opportunity for expansion of tort law in all of this,' says Dale Orlando. "They might have recov- ered and been able to return to work," he notes. There's also a two-year wait time in most cases of cata- strophic impairment during which the lower limits are very likely to run out. "At present, you have to wait two years un- less a doctor will say that there's no prospect of improvement," Orlando says. "With the dras- tic reductions, people who are very likely to be deemed catastrophically injured at the two-year point will run out of funds. Their $50,000 could be spent on home modifications alone, never mind physiother- apy, occupational therapy, and assisted devices. Attendant care at $3,000 a month will be gone in the first year. They will be left to languish for a year when it is well known that the most significant recovery takes place in the first 18 months to two years." It's these concerns that have plaintiff lawyers looking around for alternatives. "Once the accident benefit money is exhausted, it's exhausted," says Orlando. "If you don't have a lawsuit because you're the at-fault party, there's clearly nothing. You have to rely on the charity of friends and fam- ily unless you can get what the government provides through OHIP and community care, but in the very worst cases you only get four hours' help a day." If a party isn't at fault or has split liability, lawyers can request an advance from the insurance company due to hardship or ac- cess alternative financing such as supplier funds or litigation sup- port loans. Litigation loan com- panies like BridgePoint Financial Services Inc. and Rhino Legal Finance Inc. will loan money to a plaintiff without requir- ing payments or security. "I get an irrevocable di- rection from the client to re- pay the loan and interest out of the settlement monies," Orlando says in explaining the arrangements. "The problem is that the rates they charge are outra- geous. Litigation loan com- panies are obviously very cautious about how much they'll loan. They need to know they'll get it back." Stephen Pauwels, a prin- cipal at BridgePoint, has already seen a significant uptake in requests for fi- nancing. His firm provides loans as well as disbursement financing for law firms. In particular, Pauwels notes there are issues around the shortfalls between the caps on assessment costs and the actual amounts required and the fees for expert reports that parties now have to provide much earlier in the process. "Law firms have to dig deeper into their own pockets," he notes. BridgePoint also offers treat- ment and expert assessment financing for health providers facing increased requests to provide services without im- mediate payment. "There is a willingness by some treatment providers to defer payment and continue treatment on the ba- sis they will get paid out of the lawsuit," says Orlando, who's aware of the pressure this can create. "If they are doing it on a continuous basis, they can get See Changes, page 13 May 2, 2011 • Law TiMes Baxter_LT_May2_11 2.indd 1 www.lawtimesnews.com 4/27/11 2:57:54 PM Digital LT.indd 8 4/29/11 11:28:51 AM

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• Focus On Personal Injury Law