05 Dec Costs and Disbursements Driving up ICBC Claim Costs
The media in British Columbia is regularly reporting on the rising costs associated with the ICBC insurance system in the Province of British Columbia. However, no one seems to be speaking about “the elephant in the room”.
I have been working in the area of personal injury litigation for over 25 years, initially working extensively with ICBC and now only against ICBC. I’ve seen one factor that has driven up claim costs which no one seems to be willing to speak of.
Claim costs are escalating due to an ever increasing amount of “costs and disbursements” on a file. In British Columbia law, ICBC is required to pay the costs and disbursements of their own defense lawyer as well as that of the injured party. Often times, costs and disbursements end up being 10% to 25% of the entire cost of the claim. Indeed, I just settled an injury claim where the claimant’s costs and disbursements were $135,000 because ICBC refused to fairly negotiate for five years on the claim until just before trial. Clearly, costs and disbursements are one very large ticket item that ICBC can easily manage with a few easy policy corrections. In essence, the current system, because of ICBC’s management or lack thereof, is driving up overall claims costs.
To start with, ICBC tends to “lowball” self-represented claimants. I’ve seen a case where ICBC offered $10,000 to a self-represented quadriplegic knowing full well that the claim is worth millions of dollars as the injuries were catastrophic. ICBC’s own procedures of “lowballing” basically forces many self-represented claimants out to lawyers and then what happens is ICBC has to cover more costs and disbursements for both their own defense lawyer and the claimant’s lawyer.
Even when the case starts with the lawyers, ICBC is extremely resistant to making settlement proposals early. The ICBC adjusters often give the excuse that they need more information and documentation before they can evaluate the claim yet everyone in this industry can predict where the value of the claim is without the information and documentation. The fact that ICBC wants to “paper their file” over the worry of an internal audit means that ICBC’s own policies and procedures drive up claim costs.
Exacerbating the cost and disbursement issue are the medical professionals of British Columbia. Our good doctors have “jacked up” the cost of medical-legal reports exponentially over the last two decades. When I was a young lawyer, a medical report would cost somewhere in the range of $200-$800 but now, even a one or two-page report, is in the range of $1,500- $5,000. Some doctors charge over $10,000 for a report on the basis that they are worth something in the range of $800-$1000 an hour. The end result is that the current system requires that ICBC pay these massive bills.
The fact that ICBC hasn’t taken on the doctors to obtain reasonableness on the part of this procession is driving up costs. The doctors are running an oligopoly in that only a certain segment of the medical profession can write the reports and so there are no real checks and balances to ensure the cost of a medical legal report, is in fact reasonable. There is a large number of medical professionals in British Columbia that are making well in excess of $1 million per year from writing medical reports now. This money is coming from the ICBC ratepayers because of the system of costs and disbursements in British Columbia.
So in summary, with a simple re-evaluation of ICBC’s own internal policies and procedures, ICBC could save literally hundreds of millions of dollars a year. All they have to do is start realistically evaluating and paying claims early as opposed to forcing everyone to spend money on costs and disbursements. The fact that ICBC requires lawyers to order expensive doctor reports in order to “paper the file” for committee review or an internal audit, is a cost the ratepayers should not be required to pay. ICBC also has to challenge doctors that are grossly over-charging ICBC for their services. It’s not every doctor for sure, but it’s a lot of them.
Originally posted on my LinkedIn.