Private Medical Insurance and ICBC

Private Medical Insurance and ICBC

Companies that were previously paying for healthcare benefits on behalf of an insured now have become extremely creative on how to avoid paying anything


Leading up to 2018, private companies that pay healthcare benefits on behalf of one of their insured had the opportunity to receive back money from the insured through ICBC under the term, “right of subrogation”.

The NDP government rightfully so, saw the unfairness in ICBC having to pay back private companies and changed the rules but only halfway to where they need to go. The half-baked job at the Legislative Assembly means that ICBC and the private companies win with the injury victim being the loser.

Section 83 & 84 of the Insurance (Vehicle) Act clearly creates a situation on accidents after May 17, 2018 where the benefits that a private company pays to an injury victim have become “secondary benefits” and can no longer be recovered from ICBC through the injury claim or otherwise. That is, the Insurance (Vehicle) Act amendments remove the “right of subrogation”.

Companies that were previously paying for healthcare benefits on behalf of an insured now have become extremely creative on how to avoid paying anything at all despite the fact that the insured has to pay premiums to maintain the policy. In other words, they changed their practice to severely impact the injured party. All the NDP government would have to do is close the loopholes so the intended purpose of the amendments to the Insurance (Vehicle) Act would be fulfilled. That is, the intended purpose is to no longer allow private companies to receive their money back for medical expenses they pay either through ICBC or through the injured victim.

Case in point, here’s the recent precedent letter I have been receiving from Pacific Blue Cross regarding its extended health benefit coverage:

“…Pacific Blue Cross does not subrogate as we are not an insurance company, but a not-for-profit society that provides health care benefits to its members through individual and group benefit plans and in accordance with the terms of the society’s Bylaws. The plans are not insurance policies. The plans create a system of pre-paid medical benefits. The benefits payable under each plan are subject to the terms of the plan document and the Bylaws.

Since Pacific Blue Cross does not offer “insurance” policies to its members, it is not an “insurer” as defined under section 1 of the Insurance (Vehicle) Act. Therefore, Pacific Blue Cross falls outside the application of Part 5 of the Act, and the provisions of sections 83 and 84 therein. Your letter cites s. 83(b)(i) which applies to “insurance payments”. Pacific Blue Cross payments are not caught by that section. As a result, it is our position that ICBC’s liability is not reduced by the amount of the health benefits received from Pacific Blue Cross.

However, the question of whether benefits must be reimbursed is a secondary issue which follows the issue of whether any benefits are payable in these circumstances. Under Part 16 of the Bylaws and the General Provisions of the member’s group benefit plan, no health benefits are payable by Pacific Blue Cross to a member for injuries where a third party is, or may be, directly or indirectly, either in whole or in part, legally liable.

As a result of these provisions, no benefit is payable by Pacific Blue Cross in this circumstance.

However, on November 9, 2018, additional changes were made by ICBC and as a result, Pacific Blue Cross is no longer able to advance funds for medical expenses related to motor vehicle accidents occurring on or after November 9, 2018. Therefore, as of April 1, 2019, our members should no longer submit their accident-related expenses to Pacific Blue Cross, but directly to ICBC for reimbursement.

The Pacific Blue Cross benefits are not paid, payable or recoverable. Hence, our provision does not apply.

As you are aware, if there is no other coverage available, then ICBC’s Part 7 benefits cover rehabilitation expenses caused by motor vehicle accidents. ICBC cannot decline to pay the expenses. The only limiting provision they could cite is s. 88(6) of the Regulations which is an “other insurance” provision:

(6) The corporation is not liable for any expenses paid or payable to or recoverable by the insured under a medical, surgical, dental or hospital plan or law, or paid or payable by another insurer.

So just summarizing this position, Pacific Blue Cross, like many other healthcare benefit companies, had absolutely no issue purporting to provide insurance payments before the recent NDP changes to the legislation so that they could pursue a right of subrogation. Now they say their payments are not “insurance” to get around the legislation so they can avoid the situation where they actually have to pay healthcare benefits to a hard-working individual who has been paying them premiums for this insurance plan indefinitely.

This game that ICBC and the private companies are playing only impacts the injured person. Of course, ICBC is not taking the above position of Pacific Blue Cross and others at face value as they are entitled to deduct benefits “paid or payable” from another insurance company as part of the claim. Their argument is that these benefits that Pacific Blue Cross and others are providing are “payable” therefore deductible even if Pacific Blue Cross has denied payment to the injured victim. In other words, the injured victim cannot claim back from ICBC healthcare benefits that should have been paid by a private company so the injured victim is ending up paying for medical and rehabilitation expenses.

This stand off between ICBC and the private companies is a problem created by the NDP government putting in a half-baked piece of legislation quickly without speaking to all stakeholders to understand how to safeguard against impacting the injured victim. A simple conversation with a few seasoned personal injury lawyers would have identified the guaranteed attempt by the private companies to find a loophole at the cost of the injured victim. Indeed, it was incredibly predictable that private companies like Pacific Blue Cross would find some sort a loophole to avoid losing their right of subrogation. What business would not do that?

So at the end of the day, the NDP government needs to revisit this subrogation issue and close the loopholes so as to ensure that the injured victim is not further impacted. The NDP’s no-fault legislation that is in place on accidents that occurred on or after April 1, 2019 already severely curtails compensation to injured victims. It is most unfair that the injured victim is further impacted by the lack of medical expense recovery due to the standoff between ICBC and the private companies.

Written by Wes Mussio, Managing Partner of Mussio Goodman Law Group