This article was produced in partnership with Bogoroch & Associates LLP.
Mallory Hendry of Lexpert sat down with Yoni Silberman, partner at Bogoroch & Associates, to discuss the firm’s calculated approach to cash outs.
An accident benefits settlement presents a unique opportunity for an injured person,but entering into a settlement requires a careful analysis that involves “ensuring that our clients maintain continued access to vital medical and other needs, while protecting against a claim for improvident settlement,” says Yoni Silberman, partner at Bogoroch & Associates LLP.
It’s no secret that access to justice is a long, difficult and expensive road, and while someone who is non-catastrophically injured in a motor vehicle accident has access to accident benefits for up to five years from the time of their accident, more often than not, accident benefits insurers look to settle the claim around the two year anniversary, which also happens to be around the time when many benefits start to be denied. But a tort claim generally has a much longer lifespan than an accident benefits claim, and at the two-year mark, a corresponding tort case may still be in its earlier phases, like examinations for discovery.
“Around the two-year mark, the accident benefits insurer will likely arrange further insurer medical examinations, which often result in the termination of benefits. Once benefits have been denied, a settlement provides our clients with the financial resources necessary to continue with treatment, while waiting for a trial date in the tort case,” says Silberman. “More often than not, the accident benefits insurers will engage us around this time for settlement discussions.”
When considering a cash out, as a plaintiff-side personal injury lawyer, Silberman is particularly focused on ensuring that the settlement cannot be found to be improvident or made in bad faith. Prior to Bill 59, defendants in tort cases were able to claim settlements were improvident, defined as neglecting to provide for future needs, which allowed them to potentially reduce their exposure in a tort claim. For example, at the time of an accident benefits settlement, an injured party might be collecting an income replacement benefit, and while the settlement includes a payment towards past and future income replacement benefits, it could be argued that the quantum was not sufficient to cover future income replacement in the event that the plaintiff became completely unable to work due to accident-related disability.
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Changes were made to the Insurance Act and case law helped to clarify matters, including setting the current standard of bad faith where “there must be an element of intent – a much higher threshold,” Silberman notes. Two sections specifically address what an insured person and their lawyer ought to do or not do. Section 267.8(21) states in part that “. . . a payment shall be deemed not to be available to a plaintiff if the plaintiff made an application for the payment and the application was denied.”
“As a plaintiff lawyer, this provision offers clear parameters. All that is required of us is to investigate the available benefits and submit an application on behalf of our clients,” Silberman says. “For example, if we’ve discovered a long-term disability policy that could be accessible to a client, we’ve then made the application, submitted in the necessary documents, and a decision was rendered that there is no entitlement, we have met our obligation.”
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Another section, s. 267.8(22)(c), addresses that ss. 21 does not apply “if the court is satisfied that the plaintiff impaired his or her entitlement to the payment by . . . (c) settling in bad faith his or her entitlement to the payment to the detriment of a person found liable for damages in the action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of the automobile.”
“And this is where accountability and professional responsibility come to play,” Silberman says. “It is your obligation to make these applications to ensure you’ve both applied for the benefit and it has been denied, but there can never be any element of intent or the conscious doing of a wrong or dishonest act, which is tantamount to bad faith.”
Certain elements must be covered off to protect the firm and its clients against any potential arguments for improvident or bad faith settlements. Silberman ensures she has a complete appreciation of the medical conditions and prognosis, an up-to-date benefits payment statement detailing how much has been paid to the client, confirmation that the client doesn’t have any outstanding treatment accounts, as well as copies of all insurer medical examination reports. Sometimes the client is seen for an insurer’s assessment, but settlement discussions start before the report is delivered. That assessment might be favourable to the client, and increase the insurer’s exposure for a cash out, Silberman notes, adding no settlement can come to a conclusion until these bases are covered.
If it’s a more complex claim, such as a catastrophic or potentially catastrophic claimant, Silberman obtains a future care costs report where a certified life care planner or occupational therapist evaluates the client to quantify future care costs. That way, “we know what the full measure of the potential claim is, we can analyze how much, if any, can be reasonably accounted for in an accident benefits settlement, and what portion of those future care costs are the responsibility of the tortfeasor,” Silberman says.
The same can be said about a person’s income replacement benefits entitlement. If someone hasn’t returned to consistent employment following an accident – for example, since the accident they’ve staggered between inability and ability to work – there’s potential for a continuing income replacement benefit. If there’s uncertainty as to someone’s future employability, the lawyer must ensure that the cash out gives consideration for those uncertainties.
Bogoroch & Associates will recommend or not recommend a settlement on its individual merits: it's about doing a comprehensive assessment of what’s been paid, what the client’s projected needs are, and what their burn rate is. It’s also about timing, as the one strict rule around cash outs is that they can’t be made before one year has passed since the accident. And its rare for them to happen much sooner than the two-year mark “because until that time, from a medical perspective, most people have not stabilized, and we don’t have a complete picture of what their future needs might be.”
“Accident benefits settlements aren’t frequently challenged – in my experience, I cannot think of even one time when this happened,” Silberman says. “That goes back to the fact that we’re very deliberate and calculated in our advice to clients to enter into accident benefits settlements before a tort case comes to its conclusion.”
Yoni Silberman joined Bogoroch & Associates LLP in April 2009. Since joining the firm, Yoni’s practice has been devoted to personal injury litigation, including motor vehicle accident cases, accident benefits claims, slip and fall cases, long-term disability claims, and other disability and insurance litigation.