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 Turonto,Ont.ario J\,12N 61.,9

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Mr. \V-ayne Arthurs Parliamentary Assistant to me Minister of Finance Ministry ofFinance 7 Queen ~ s Park Crescent

7:. h 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:: DRIVEI MISS1SSAUGA, ON L5B 3C1

TEL: 9(}5"896~W.r-5 FAX: 905"896·5879 mayor@missis:Sillugill.i.-a

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In particular, the City of l\1iss.issa'ug:a takes the position that the Insurance Act requires amendmentso 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 datedJ 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 injury 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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MICl 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. leck@ttc.ca

Mr. Wayne A rthurs Parliamentary Assistant to the

Minister of Finance SENT VIA EM AIL A ND COURIER Ministry of Finance 71n Floor, Frost Building South 7 Queen's Park Crescent Toronto, ON M7A 1Y7

Dear Mr. Arthurs:

Thank you for your letter of June 3, 2008 inviting submissions from stakeholders in respect of the cur rent 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 forward 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 inancial burden which is developing into an unaffordable burden on transit authorities and those who fund them . Abuse of the provisions of the Statutory Accident Benefits Schedule (" SA BS" ) by an increasing number 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.

DEFININ G PUBLIC TRAN SIT

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

"public transit " means any serv ice f or which a fa re is charged for t ransporti ng t he public by vehicles operat ed by or on behalf of a municipality or a local board , o r under an agreement with a municipality or a loca l board .

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In addition, we note that the re is an enumerat ed list of publ ic t ransit systems in this province which is set out on the Ontario M in istry of Transport at ion webs ite and w hich co uld fo rm a schedule under a Regulation to the Insurance A ct if the ch ange being proposed in this paper is adopted .

PROPOSED CHANGE TO THE lEGISLAliON AND RATIONA LE FOR IT

The Toronto Transit Commission (" TTC") and TT C Insurance Company Limited ("TTCICl") propose that t he leg islation be ame nded so as to prov ide an exemption for all publ ic transit in Ontario from ace-dent benefit or no -fault legislation. Instead . we propose a return to a pure fault system for 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 includes eliminat ing bo th the presen t ve rba l th reshold and the presen t $30 .000 deductible now applicab le t o claim s in t ort where acc ident benefi t s are available. Inasmuch as public transit veh icles are common carriers, found by the Supreme Cour t o f Canada1 to 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 high degree. there al ready exist s in law a higher dut y upon a public transit system in the context of a claim o f negligence or faul t th an would be placed on other motorists w ith w hom pu blic t ransit vehicles are cu rrently classi fi ed in the SA BS as equivalent.

Presentl y , the public tr ans it t ort plaint iff enjoys a proof -based leniency not ava ilable to others subject to the SA BS. It is not proposed that this higher degree of duty be lowered if a pure­to rt system such as is be ing rec om me nded were adopte d . Th is fact. along w it h the extinguishing of the $30,000 deductible and the ve rbal t hresho ld would prov ide benefit s to plaint iffs who see k t o recover damages in to rt fr om a tr an sit sys tem . Cla imants w it h genu ine inju ries and support able cases in the area of liabil ity w ould be fair ly compensated t hroug h th e t ort sys te m. A s in the pas t , th ere w ould be no "up side " in forcing such legitima te claimants through ardu ous court proceedi ng s where th eir cases len d themse lves to prompt settlemen t .

Rationales for the Proposed Change

Many of the rat ionales put forward in favour of no-f ault ins urance which m ight be reasonab le for pr iva te passenqer-tvpe au to mobiles are unreasonable in t he unique environment of public t ran sit. The or iginal theor y suppo rt ing a no -fault reg ime had merit in th at it was designed to operate in a system where tort w as entirely el im inated (and st ill does op erate w ith success, In Quebec and Manit oba where tort claims are not permmeo"). In Ontario, it has fa iled utterly as an attempt to lower costs by avoid ing lit igation ove r liability and reducing overa ll

Kau ffm an v Taranto Transit Commission , (19 60 1 S.C.J . No . 5 (S.C.C. )

2 There are some rmncr exc eptions In Manitoba and none in Quebec .

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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 simply does not work . In the case of large u rban cen tres and large transit systems, it is com pletely inappropriat e and has resulted in drastically inc reased expense for patrons of the system and taxpayers in general.

Not a New Proposal

From t he beginn ing of th is decade to the present , the TTC and other 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 far back as 2002 and 2003, the City of Mississauga wrote letters to the Honou rable Minister of Finance sett ing out the issues wh ich were becom ing inc reasing ly problematic for transit systems sin ce the 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 Commission as well as other publ ic t ransit systems, the City has bee n a target for cla ims involv ing elements of f raud and /o r exaggerated injur ies and damages. Typical of many urban m unic ipal public t ransit systems, t he City is self­insu red for v irtually all Accident Benefits claim s and bodily injury tort c laim s wh ich are pa id directly from m unici pal operating budgets ... It is our posit ion that public transit should be ex empt from the acc ident benefit legislat ion due to the heav y and unfa ir f inancial burden to the City ."

Unfortunately, var ious chan ges (most espe c ially , the prov isions 01 Bill 198) have been m ade to the SASS reg ime since 2002 , which, overall , have had the effect of inc reasing dubious expenses fo r the users of public transit. In a rep ort dated January 2008 , the City of Brampton stated t hat 59 % of the 2006 transit c laims related directly to Ontario 's no- faul t in surance leg isla ti on , and that t hese accounted for 82 % of the cla ims funds expended . The City of Brampton stated th at " t he im pact of the mandatory acciden t benefits on the City t ransit in surance premiums and cla ims experience has been astronomical ". The City of Brampton adopted a mot ion requesting that the Prov ince review the impact on public transit of it s no -fault and acc ident benef it leg islati on 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 modi f ied no­fa ult / acciden t ben ef it reg im e for pu blic transit .

Other large urban cent res in Ontario have experienced sim ilar pro blems. In addit ion to the City of M ississauga and City of Brampton , Hamilt on and Yo rk Region3 have advised of serious concern s and have expressed a strong des ire to be exe mpted fr om the no-faul t reg ime. They are no t alone. Even public transit systems in northern Ontario (and in eastern Ontario ) have begun to experience "pay now (in settlement) o r pay later (in assessments)" c laim s from local paralegals and lawyers act ing on behalf of SASS claim ant s. OPTA (t he Ontario Public Transit Association) and the Ontario Regio na l Committee of CUTA (t he Canad ian Urban Tra nsi t Associat ion), wh ich have observed t hese effects o ver t im e, also support the pr oposal.

For exa mple, York Reg ion , be l ore til e accide nt ben ef its reg ime, and at its inception, had a deductible f rom

the ir insurers o f $5 ,0 0 0 per cl aim As the SASS sch em e took hold , it becam e necessary t o rai se that de ductible to $10,000. As 01 this su bm iss ion, it is at $100,000 ,00. That is a J_!:IP0J:lEACENT increas e - and ab sent some ch ange, it is li kely t o continu e t o r ise .

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Toronto Transit Commission

Below is a chart ind icat ing the claims payment s for no -fault benefits , t ort liability and general l iabili ty (subway and other property) for the years 2004 through to 2007 inc lusive . These are amounts wh ich incl ude all claims fo r benefits, dam ages , interest , medica l costs and disbursements, and legal costs, related t o the claims in these areas (in mi llions) .

TTC Claim Payment s 1000,0001

-2004

Accident Ben efits 1_$6 .4 __ . _ . -- ­Motor V ehicle Tort $4 .8

2005 _..­$8 .5 - -

$3.8

1 200 6 $8 .3 $3 .4

2007 $10 .4 $5 . 1

liability General liability $1.9 $1.4 $2 .6 $1 .8

One of the area s of concern , as di scussed below, relates to the cost s for medical assessments and medical reports. It should be noted t hat of the no -f ault benefi ts pa id by TTCICL , over 1/3 of the costs relate to medical assessmen ts and report costs, not inc lud ing any amoun ts for direct medical benefits, attendant ca re benefits. and rehabi litat ion expenses. The exp erien ces of the Tor onto Transit Comm ission are not unique : experience across the Greater Toront o and Ham ilt on area has been similar. The following are the am ount s expended by TTC f or these assessment and report costs fo r the years 2004 t hrough to 2007 (in mill ions):

TTC Assessment and Report Costs 1000,0001

I2",00",,4,---+2005 ,200 6 . 1 200 7 A ssessment & Report $2 .3 $2 .7 $3 .5 Costs i

The costs fo r me dical assessments and medical repo rts alm ost doubled from 2004 to 2007 and are ex pecte d to continue to rise when t he sta tis ti cs for 2008 are avai lable.

WHY NO-FAULT IS INCREASINGLY INAPPROPRIATE FOR PUBLIC TRANSIT

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 for various benefits as aga inst the transit in surer. "Accident" is defined , in part, as an incident in which t he use or ope ration of an automobile d irectly c auses an impairment. Public trans it veh icles (buses, and, in To ronto, also streetcars) are captured in the present legis lation by the definition of "automobile " .

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An Ind ividua 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 aware of an incident having occurred ) can pursue a no-fault cla im against the t ransit authority if he or she does not own an in sured automobi le, is no t named as a dr iver on anot her aut omobile po licy, and is not the spouse or dependent of someon e w ho owns an ins u red automobile. In some cit ies -- and in Toronto in pa rt icular -- there are 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 make a claim 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 authorities are reporting increasing loo seness in the interpretation of who is covered under a po licy such t hat the co st is for ced bac k onto the tr ansit system. (For in st ance, an " added driver" 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, some major distinctions can be seen between the situation involv ing private in surance companies and t heir ins ured s, and the situation involving public transit . In the private in surance industry, t here 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 , fo r a policy of insuranc e. Both part ies en tering into 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 decide 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 and ris k issues to the benefit of both parties to the cont ract . It is anomalous to define members of an am biguous and un known , constantly chang ing group numbering into the millions of persons as "first part ies" . The term "first par ty" in the in surance context suggest s the "first party " is a known entity who, having weighed risks and benef its, has entered into a contract . That is not true with public t rans it rider s.

No Contra ctual Relationship

The tru ly con tr actual nature of privat e insurance has led to economic benefits to pr ivate Insurers . There is a recogn ized reluct ance on t he part of the ir t rue "first parties" to pursue c laim s - some frivolous, some not - for fea r t hat thei r con t ract of insurance will be subject to revision upon renewal , o r w ill be cancelled altogether.

It is not uncommon fo r a perso n w ho attempts to advance a claim against a t ransit authority , 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 complaints such that no claim is made. It is also not uncommon fo r per sons t o mislead transit aut horit ies by c laiming to be divorced from po licy ho lders to whom t hey are st ill married , or claiming no t to have any form of available insurance when they do . Transit authority adjusters 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) for claimants. These are not situations faced by those insu ring private drivers, aware of the inherent risks of ma king fr ivolous or bogus c laim s. In addition, private insurers face no issue in determining 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.

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The transit business is unique - comple te strangers are deemed to be parties to a contract and thus insured from the moment they beg in the process of boarding a t ransit vehicle .

Transit authorities operate vehicles of ma ss transit in which there is a com plete arms-length relationship to customers, each of whom by virtue of the no -fau lt system is a potential "insured " cl aimant. In an ideal worl d , tr ansit authorities could t rust each and every rider advancing a cla im but experience has shown this no t to be the case .

No Deterrent to Claiming

The public 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 xpayers). There are no premium consequences fo r ind ividuals w ho may make repeated cla ims, question able or not . These cla ims can be ma de repe atedly without proof of negligence 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 terms un der the no-f ault benefit legislation , tra nsit companies are particu larl y vulner able to fab ric ated and exaggerated claim s and abuse of process by c laimants. Claim s often include alleged injury caused by minor falls or bumps, by twists or turns at various loc at ions on vehic les, inc luding in the aisles while holding onto 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 walks into the side of a bus is deemed to have been affected by the "use or operat ion" of the bus. Each o f these "accidents " is a potential opportunity t o adva nce a cla im , reg ardless of whether or not there is any negligence on the part of the publ ic tr ans it authority . M any of t hese no- faul t "accidents" are largely beyond the purview of risk control efforts inst ituted by the publ ic transit authority.

There is often a lack of subst antia l, co rroborating evidence of a "real " accident , other than of course , the ins ureds' descr iption . There is no strict du ty to report an incident to the publ ic trans it au thority or police at the t ime of the incident occu rring. Report s may be rece ived days lat er , many times w ithou t a d river having any know ledge of the inc ident . Nonetheless, the t ransit authority has an obligation of good fa ith and there are very short t ime constraints with res pect to response from 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 the syst em , the cycle of costs for the insurer of the t ransit authority begins .

It is no t uncommon to have mu ltiple cla ims from the same individua ls, or the ir re lat ives. Also common are situations where one f am ily member -- afte r his or her claim is settled .­becomes the "paid attendant" or "housekee per" under t he SA SS f or another fam ily member who later advances a fresh c laim . In or der to advance a c laim that one was injured on a vehicle , often one need have very litt le more information th an the locat ion of an accident involv ing a public tra nsit vehi cle or a vehicle number, both of which are plainly avai lable through word of mouth , through the media, through observat ion of passing veh ic les , all creating opportunities for those who would seek out the opportunity to make frivolous claims . In fact, none of thi s is required. A person can simply assert that he or she fell or was inj ured on a public transit vehicle with no inf orm at ion other than the route in order t o

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cause the investigat ion of a claim and the rise of the strict timel ines (im posed rigo rously on Insurers -- at the same time t hat the time lines im posed on insureds 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 frequently drawn into t he unwieldy and exor bi tant ly costl y no -fa ult regime, in very quest ionable c irc umst anc es. There is an extremely expensive and elaborate system of medical fees and assessment costs for what appear to be minor soft tissue inj uries. These assessments often invo lve a mu lt i-disciplinary tea m of experts (psyc hiat rist s, o rt ho paed ic surgeons, neur olog ists and ot her m edic al experts ). Ma ny of those defend ing these cla ims have difficul ty accepting that t he t yp ical alleged injury aris ing from the situations m entioned above should rout inely require the full gamut of medical consu ltations, assessments and treatments, including typ ically physiotherapy, m assage, chi roprac t ic, orthopaedic, neurological and psycho logical expertise .

There are inst ances where the medical costs asso cia ted w it h a m inor soft -t issue injury fro m an alleged bump aga inst a pole, o r jost ling in a ve hicle , have cost te ns of t housands of dollar s - and th is is simply on the m edical side w here a sizeable and quest ionable array of clin ics operate w ith a vested int erest in assessing clai mants as in need of t reatment ." We are concerned tha t t here may be " arrangements " made with these " 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 referral. A nd, of course , m ed ical incapac it y then supports cla ims for a variety of ot her bene fits such as income rep lacement, non-earner benef it s, housekeeping, attendant care, and the like. In order t o deny these cla ims, the insurer has to incur massive cost s of assess ing t he cl aimant s not only for t he insur er' s purpose , but also has to fund the assessments the cla imants obta in to coun ter the insurer' s exam ination (this latter situation came into law with the passage of Bill 1981.

~ Perh aps there is no better in st ance of th is t ha n a sit uat ion which occ urred on the TT C' s Daw es Road bus in

200 3 . A t ip to th e Toron t o Poli ce Ser vice in t he for m of a vi deo t aped statement adv ised the m one day in eavence of an acc ide nt w hich w as to occu r on a Sunday eveni ng when a U -Haul t ruck would m ak e a mino r im pact w ith the re ar of a TTC ve hi cl e. The incid ent d id occur. The bus, w hi ch nor m ally carri ed abou t 40

pe rsons. on this da y carried 80 . After th e acc ide nt, approxi mately 40 pers ons simply took the next bus and were not heard frorn ag ain , Ho w ever, the other 40 claim ed inj ur y requiring am bul ance s an d hospital ex aminat ions. Virt ually all w ere from the same area of t he ci t y wh ic h w as nowher e near Daw es Road and the ir exp lanations o f why they were on the bus were conflict ing and i llogi c al. Despit e ttus - and this is th e critical fact - by the Tuesday morn ing after that ac cident. t h ir ty- five alleg ed " medi cal pr ofe ssion als" had found these person s d isabl ed and in ne ed of treatment - tr eat m ent t o be pro v ided at the t ra ns it com pany 's expense by the sam e profession als who co mp leted th e f orms . Not on e 01 these cl aims w as accepte d , and no t one of t he alleged ly inju red par t ies pursued their cla im once the story of t he fr aud broke in t he m ed ia. No one can say how many of th ese ca ses ex ist beca use only due to the conscience of an inf orm er involv ed in the sch em e w as

th is on e uncov ered.

Sin ce that t im e, t he "i ndustry " o f med ical care pr oviders who benef it from a findi ng that a claimant needs tre atment has grown qecrnetncallv Indeed, it is commonl y th e case tha t a c lai man t w ill be refe rred to "therapy" no t by hi s or her docto r, bu t by a legal ag ent or by a special "a ccid en t doctor " .

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These t ypes of alleged soft t issue inju ries and tile infrastructure surrounding them in the no ­fau lt regime are generating enormous and often unwa rranted medical and legal costs . A simi lar bump, trip or jostl e which occu rs ou tside the un iverse of the no -fa ult insuranc e reg ime , such as incidents in one's own backyard or home or eve n on a subway, certa in ly do not seem to generate t he same degree of medical attention and costs - if they genera te any at all. Studies involv ing soft tissue injuries aris ing in count ries w hich do not have rich and extensive 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 ithuani a conc luded t hat, wit hout in surance, involvement of the therapeu ti c community , lit igation, and pre-conceived not ions about whiplash , the symptoms 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 authorit ies ope rate large, extremely safe vehic les capable of withstanding major impacts at times without persons on the bus or streetcar even knowing th ere has been an im pact until after it is over . Given that Ontario's heal t h care system has difficu lty promptly treat ing everyone who has a genuine, ser ious illness or injury, it is worth reassessing t he social costs, benefits and impact of the no-fault leg islat ion in the con text o f t rans it. At the end of the day, t he ta xpayers fund our healthcare system, and 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 proliferated Since the passage of no-fault legi slati on and never more so than since th e passage of Sill 198 .

Separate Claims Handling Requirements

Another costl y effect of t his system is that in all of t he no -fa ult cases , separa te files and file handl ing m ust be established for 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 operat ing budgets .

The Folly of Hoping for One Result white Rewarding Another

Under ly ing th is submiss ion is the indispu table fact 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 authorities w ho purchase insuranc e f rom private insurers have seen deduct ibles incr ease to the 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 riders and all taxpayers.

The Province has mandated growth of pub lic t ransit in o rder to improve the environment and t he qua lity of life in Ontario . Provincial fund ing f rom such sources as the gasoline tax cannot be utilized for "capita l development " if the system has become, to some extent , a revenue generato r for claimants and the various indu st ries that support them . Should t he economic downturn in Ontario cont inu e, it is only reasonable to expect that there w ill be inc reased interest in t he "easy money" ava ilable by making cla ims against a pub lic trans it authority. At the same time, as gas pr ices increase, public t ransit ridership , w hic h has already been gr ow ing stead ily , is expected to gr ow eve n more. Cap ita l ex pan sion and serv ice im provem ent s w ill be necessary to meet inc reased demand - but it like ly also wi ll lead to an Inc reas ing number of claim s f ro m abusers of t he SA SS. The co st of fr audulent cl aim s may w ell outstrip th e revenue mc rease assoc iat ed w it h increased riders hip , pa rt icu lar ly g ive n t hat

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some sizeab le port ion of the increase has been attracted by eff ecti ve fare red ucti ons, such as revised ru les on the use of passes , and in some cases , free pub lic transit. One m ight wonder 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 hinders public transi t authorities and the provinc ia l government from meet ing the goal of off ering an economical , reasonable and efficient t ransit system . Unfortunately, the no -fau lt system creates an impediment to t he expressed goals of all part ies in Ontario wit h regard t o public transit.

Referrin g back to the rationales f or no-fault , they have not been borne out . Claims' costs, and, in part icu lar, medica l assessments, reports and other relat ed co sts have soared . Likewise , liabili t y has not bee n el im ina ted or reduced as an issue . The verba l threshold has been dramatically weakened over the years as a result of court int erpret ation. The t hreshold applies strictly to general damages, and ot her claims such as economic loss claim s may pr oc eed in tort regardless of the extent of t he threshold and the extent of the inj ury as a result of Bill 198. There is thus a t rue benef it in build ing a m assive SASS claim 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 injury 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 regim e in Ontario . Some of t he major problems include the following:

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

• The medical rep ort and assessment system , involv ing in iti al med ica l assessment , rebu ttal assessment/ report , rep ly to rebu ttal assessmentlreport is now all at the insurers' expense, and is of questionable va lue;

• Cla imants are able to iso late separate benefit claim s and proceed w ith repeat ed and separate me d iati on s and arb itrations -- all at the insurers' expens e;

• Th e c riteria fo r catastrophic assessme nts have been substant ially weakened as a resu lt of Cour t and FSCO arbit ration decisions. 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 obtainin g medica l reports (funded by insurer) and t he purpose of arbitrating each one at the Insu rers' expense, thus inc reasing the insurers' overall on going costs, wi th a view to pressuring a settlement of t he case;

• Even m inor injury c laim s can now result in a requisit ion to the insur er for a cat ast ro phic assessment. These assessments oft en can cost between $20,000 t o

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$30,000, involv ing a multi -di sci plinary t eam of pro f essional experts (psychiatrists , orthopaedic surgeons, neu ro logists, and other medical experts);

• Public t ransit authorities or their insurers 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 , invest igat ive evidence alone is not sufficient);

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

• The th resho ld in tort applies only to genera l damages ~ various other cla ims, such as economic 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 fo r 10 years post -ac cident with new t reatment plans each of which can cost t housands of dollars t o assess) .

OTHER JURISOICTIONS

Different types of no-fault 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 found land & Lab rador had a no-fault syst em which appl ied to public t ransit vehicles. The no-f au lt system w as then discarded , and no -fault was provided as an option un der a policy , thus render ing it inapplicab le to public t ransit . Transit systems in Newfoundland & Labrado r are now in a strict tort reg im e, and this ch ange has res ulted in a substant 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 ited 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 areas where there is some no-fault coverage available (and it must be remembered 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 here 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 ransi t and automobiles is based on the public nature of t he bu rden for t ransi t au thorities and not on the flawed log ic that all conveyances which move on whee ls must be trea ted exactly alike . The latter reasoning , wh ich presently preva ils in Ontario , 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 dreds of persons are injured in bicyc le accidents, either between two bicycles, or between a pedestr ian and a bicycle. There are no acc ident benefits avai lable to them . The determ 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 ransit no-fault situa tion , the

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decision of tha t person to become a party t o a co ntract of insu ranc e and pay the pr ice for so doing , or adopt th e risks of not do ing so and allowing th e tort sys tem to operat e t o make them w hole , shou ld injury occur .

In sho rt. the no-fault syste m is not working , and in par t icu lar is not working for public t ransit. A recent art ic le should be noted wit h respect to t he sit uat ion in New Yor k State (and part icu larly New York City). w hich exem plifies the potent ial seriousness of these issues:

In at least on e state, New York, the no-teen p lan suddenly and unexp ectedly led to an enormous flood of litigation beginning aro und 1995 and continuing unabated to date (20 07). As documented by the New York State Insu rance Departmen t and b y New York Court of Appeals, a billion dollar a year "no- teutt fraud industry" has emerged, in which large numbers of peop le ... are recruited by "criminal rings " . They are " then involved in de libe rate or "staged" accidents. The " victims" are then referred to compliant "m edical c lin ics " wh ich supp ly unnecessary, questionable or redundant treatment and/or m edical supplies. Medica l bills are sent en masse to no-fault insurers and when payment is denied a suit IS

commenced b y a number of law f irms which apparently sp ecialize in j us t this kind of claim ... no-faul t litigation is reported to constitute 25 % of all law suits f iled in New York Cit y Civil Court .

CONCLUSION

To summarize. the no -faul t system is not w orking fo r public t ran sit. All the fo regoing is subm itted in support of a proposal to :

1) exempt publ ic trans 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 the use o r operat ion of surf ace vehi cles o wned by pub lic t ransit authorities t o a pure t ort reg im e;

3) elim ina te the verbal t hresho ld as a bar to making a claim in to rt involving publ ic trans it now subjec t to it ;

4 ) eliminate the monetary thresho ld (the $30 ,000 deductib le) as a bar to making a c laim in tort against pu blic trans it now subject to it .

Th ank yo u again fo r allowing public trans it author ities this opportun ity to present our views as you co nsider the existing legislation and proposed changes thereto . We wou ld be pleased

~' ~,o . "'''0.' comment s or respond to anv ",,'0. "0 m. ht

_~ 1~/L Brian M . Leek General Co unsel

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