AUTO ACCIDENT MEDIATIONS: TIPS SHEET
- Joseph Sullivan
Mediation has been prominent in the injury and insurance field since the 1990s and has developed into a mainstay of personal injury and insurance practice. Expansion of mediation seems to have coincided with the establishment of no-fault auto insurance in Ontario in 1990. No-fault car insurance significantly lengthened trials and made bodily injury tort and first party accident benefits claims much more complex. Many more experts testify at trials and, in my view, the courts have not done a good job in managing the length of personal injury trials or the number of experts.
The significant lengthening of civil proceedings has naturally led to an extraordinary increase in legal costs associated with these cases. Our law respecting Offers to Settle is designed to make the loser pay the winner’s legal fees. This creates significant risk in almost every personal injury case.
Because of the increased expense of trials, settlement at private mediation must almost always be considered.
TIPS WHEN MEDIATING CATASTROPHIC INJURY CLAIMS
Global mediation frequently is utilized in catastrophic auto injury cases for tort and accident benefits claims. Of course, these are cases where the plaintiff’s injuries are so severe that they meet the definition of catastrophic injury within the meaning of the Statutory Accident Benefits Schedule.
When mediating catastrophic injury claims, plaintiff’s counsel must consider the following:
Will there be a barrier at a tort mediation if the accident benefits insurer is not present? Most tort defendants will want full credit for available accident benefits.
Paid-to-date figures under the accident benefits’ various categories must be readily available.
Are certain benefits still being paid on an ongoing basis and, if so, at what rate? This is often referred to as a burn rate.
Is it likely medical/rehabilitation limits or attendant care limits will be exhausted under the Statutory Accident Benefits Schedule?
Do the parties need structured settlement quotations to assess the accident benefits maximum future exposure? If so, these should be obtained within 30 days of a private mediation so they are current. Structured settlement providers can also look at medical records to see if the plaintiff’s life expectancy is at all impaired. If so, this can make a significant difference in the cost of the structured settlement annuity.
In global tort/accident benefits mediations, astute plaintiff’s counsel may claim future medical or other services at market rates rather than the lower accident benefits rates permitted under the Statutory Accident Benefits Schedule. This discrepancy can be significant and should be identified early in the mediation proceedings (or ideally in the Mediation Briefs) so that the tort defendant has an opportunity to assess its exposure well in advance of the scheduled mediation.
Past accident benefits interest for overdue payments should be considered well prior to mediation. Such exposures can be significant and need to be calculated well in advance of the mediation so the defence can adequately assess authority requirements for settlement.
I recommend plaintiff’s counsel circulate the Disbursements List prior to the mediation especially if they are significant. Most insurers need to factor those disbursements into authority requests. Such authority requests are often developed 4-6 weeks prior to a mediation.
Late-breaking developments such as new medical reports, unusually high disbursements and new economic loss reports can be problematical at a mediation and could lead to an insurer coming with inadequate authority to settle.
Precise terms of settlement should be developed if consensus is achieved at mediation. Tort cases often settle on a “final” basis for all claims in the Statement of Claim arising out of a particular auto accident and the litigation is dismissed without costs. Full and Final Releases are signed. Sometimes special terms, however, need to be considered in global mediations which include the following:
Is the settlement subject to court approval?
Is the settlement subject to Family Law Act claimants approving the resolution if they are not present at the mediation?
Will a confidentiality clause be required in a Full and Final Release? (This is usual in long term disability claims and some tort claims).
Is the settlement subject to a mental capacity assessment if there is any doubt that the plaintiff understands the settlement?
In terms of accident benefits resolutions, is the settlement a full and final release of all past, present and future claims and all claims whether submitted, approved or incurred to date?
Prior to mediation, it is important to identify any treatment expenses that a medical provider may have incurred, but has not been paid for. For example, a physiotherapy Treatment Plan that is halfway exhausted. Such treatment providers should have statements prepared as to what might be owing. A barrier occurs at mediation when these inquiries are not made until late in the day because the treatment providers may not be able to provide a last minute statement of expenses owing.
Organized plaintiff’s lawyers contact the treatment providers prior to the day of mediation so there is no misunderstanding as to what might be owing for past treatment provided. Even insurance adjusters might not be aware of the progress of a medical provider’s invoicing.
Prudent plaintiff’s counsel will explain the nature of a full and final settlement of an accident benefits or long term disability claim. If there are any other expenses, past benefits, interest or other issues, these need to be addressed carefully.
In terms of short term and long term disability claims, income tax could be payable on a settlement. Sometimes the long term disability carrier can spread out the lump sum settlement over a number of years to minimize income tax in a perfectly legal and legitimate manner.
Many times in larger cases, weekly income benefits are continuing to be paid at the time of a private mediation as well as other benefits such as attendant care monthly benefits. It is important at a private mediation to be precise when these regular payments will be stopped if there is a full and final cash-out of all past, present and future claims.
Both plaintiffs and insurers need to be prepared by their counsel for the management of client expectations. Insurers must be careful to have their reserves set accurately and plaintiffs need to be keenly aware of the thrusts of the defence arguments so that the trial risk is adequately addressed.
ABOUT THE AUTHOR
Joseph operates Sullivan Mediations in Hamilton, Ontario and mediates across Ontario. He also is a Qualified Arbitrator as recognized by the ADR Institute of Canada.
