B.C. trial lawyers claim ICBC is withdrawing settlement offers and lowballing victims with a tough-nosed approach that will backfire, but the Crown agency says it’s only trying to contain staggering legal costs.
Matthew Fahey, of the Westpoint Law Group, said he was going crazy Friday morning after an about-face by the Insurance Corp. of B.C.
“In the middle of a negotiation — ICBC was at 40k, I was at 50k — adjuster then says all offers gone, can now only offer 20k,” he complained.
“Adjusters have explained that it is part of a new strategy. ICBC is withdrawing all offers, making lower offers and not negotiating thereafter. Now we have to litigate the matter, which will cost ratepayers a lot of money.”
Guy Collette, of Collette Parsons Harris, said an ICBC adjuster similarly told him this week that an offer was no longer available after Monday in a case involving a 63-year-old woman pedestrian hit by a truck.
And any future offer would be for less money, he added.
“I was advised there is now a meat chart where the patients would be characterized on a one-to-five scale, no consideration of the individual, just rate the injury: one being the most minor and five being the most severe,” Collette said. “And there will be a cap on non-pecuniary damages for each of those numbers over which they will not be able to exceed. Period.”
Other litigators and the Trial Lawyers Association of B.C., which has about 1,500 members, expressed similar concerns, saying the move would cost ICBC a small fortune because many more cases would unnecessarily go to trial.
More than bad business, they insisted such an approach reached the level of a miscarriage of justice and bad-faith negotiations.
ICBC, though, denied any Machiavellian intent and blamed sky-high increases last year in legal expenses for triggering tougher scrutiny of settlement offers.
In the last five years, there has been a 43 per cent increase in the cost of injury claims, reaching some $3.67 billion last year, ICBC said in a statement.
“In particular, these costs are being driven by litigated injury claims — since March 2017, the dollar value of settlements demanded by plaintiff lawyers for litigated files has increased by 30 per cent, while the average cost of closed litigated injury claims has risen by 20 per cent from $101,920 in 2017 to $121,826 in our current fiscal year.”
Reasonable rate hikes won’t cover those kind of increases, an ICBC spokesperson said:
“We have constantly been looking for ways to address rising injury claims costs and the pressure they put on insurance rates and it’s clear we need to continue to find fair and reasonable ways to get the cost of the average injury claim down to more of a historical, inflationary trend rather than the sharp increases we’ve seen over the past year — increases of 20 per cent or more in some cases.”
Nevertheless, there was no directive to cap claims, no so-called meat chart and no magic $15,000 figure.
ICBC settles 15,000 claims a year, taking fewer than 200 to trial, and closed more files than ever last year with an average payout of $16,500.
Under changes that take effect April 1, however, there will be a cap of $5,500 on payouts for pain and suffering for minor injuries.
“In our view, ICBC is acting inappropriately on legislation and regulations that do not become law in this province until April 1,” said Ron Nairne, president of the Trial Lawyers Association.
“They have done so without any public communication or advance warning of this shift. Thousands of individuals across this province who have been injured in a car accident are hurting now. They need financial relief now, and ICBC is taking that option off the table.
“When will the assault on the rights and personal finances of injured British Columbians end?”
In almost 90 per cent of current cases, however, the company said it hasn’t even heard from plaintiffs about their actual condition, the amount they’re seeking or why they deserve it.
Still, in the dark, ICBC has made offers to settle on nearly 60 per cent of those files.
“We currently only have plaintiff demands on less than 10 per cent of our open injury claims, making it very difficult for us to make appropriate settlement offers,” the spokesperson said.
“When demands are being made by a plaintiff, those demands have increased by 30 per cent since 2017.”
Attorney General David Eby introduced measures hoping to resuscitate the ailing corporation, saying almost half of the average settlement wasn’t going to the injured person but toward legal expenses and fees.
Yet Eby’s numbers have been disputed, his touted $1-billion annual savings called into doubt and the minister dubbed “Trump-like.”
“I know that Mr. Eby has been saying that legal costs, defence costs and litigation costs are a big issue with respect to ICBC’s financial problems,” Collette said.
“I don’t accept that. If that premise were true, what they are doing now does not go to remedy that.”
John Green, of North Vancouver’s Hanson & Co., noted there were other problems — the insurance giant’s recent offers were ridiculous and he had two cases in which the courts awarded double and triple its offer.
“Now the judge is mulling awarding double costs against ICBC,” he added.
“Their offers have been stratospherically out to lunch recently. I don’t know what’s going on with them, but I do know that in the cases I’ve had with them recently they’ve sunk an enormous amount of money for a poor result.”
Green was equally critical of the new approach.
“If they start to cut off offers, I know I’ll pretty much be in trial for the next three years,” he said. “Which is good for associate lawyers who are looking to work for me, I guess, but I don’t know how effective it is for saving money. If they do take that hardline approach, firms like mine will have to be in court on more cases. Instead of the one out of 10, it will be more like nine out of 10.”
B.C. was the last province where drivers sued each other under a purely litigation-based insurance scheme, and the incoming minor-injury cap is slightly higher than Alberta’s $5,020 and Ontario’s $3,500 ceiling but lower than those in New Brunswick, Nova Scotia, P.E.I. and Newfoundland.
Quebec and Manitoba have no-fault insurance, which restricts lawsuits, and Saskatchewan has a dual system, with a $5,000 cap on litigation.
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