BC TO SHIFT THE COST OF HEALTH CARE ONTO INSURERS IN BI CLAIMS

Since the early 1950s, the insurance industry in British Columbia has been subject to a “Gentlemen’s Agreement” with the Provincial Government, whereby insurers agreed to repay the Ministry of Health in Victoria, BC for hospital costs incurred by claimants injured as a result of the negligence of their insureds. In theory, before settling any personal injury liability claims, insurers and their representatives were to inquire of the Ministry of Health whether hospital costs were incurred in respect of the claim, and any costs incurred by the Ministry on account of hospital care would be repaid by the tortfeasor’s insurer.

In practice, this occurs only occasionally. While the Ministry of Health regularly writes to insurers or their counsel to demand repayment of hospital costs, the Gentlemen’s Agreement is likely unenforceable, and the Ministry has little bargaining power or ability to enforce such claims. In cases involving out-of-province insurers, who were not part of the original Gentlemen’s Agreement, there is no legal basis for the Hospitals claim at all.

This state of affairs is about to change. In 2008, BC’s Legislature introduced Bill 22, the Health Care Costs Recovery Act. Some highlights of the Act are as follows:

• If the beneficiary of health care services (i.e. the plaintiff) commences legal action for personal injuries or death, he or she must include a health care services claim in the legal proceeding;

• The health care services claim would include all government funded services, including hospital costs, medicare and continuing and future care costs;

• A claimant must notify the government of any legal proceeding within 21 days of commencement of the proceeding;

• If an insurer becomes aware that its insured has or may have caused personal injuries to or death of a beneficiary, the insurer must notify the government within 60 days of becoming aware of the matter, and must then comply with the Ministry’s requests for further information;

• The government may intervene or assume conduct of the health care services claim portion of a proceeding;

• The government is subrogated to the beneficiary’s right to recover past and future health costs and may commence a proceeding for health care costs in its own name or in the name of the beneficiary, with or without he beneficiary’s permission;

• A claim must not be settled unless the Ministry is notified and consents to the settlement, and any release is void absent such consent;

• The Act does not apply to injury claims brought against wrongdoers having coverage under the Insurance (Vehicle) Act (i.e. ICBC insureds).

If passed, Bill 22 will have a dramatic effect on the handling of bodily injury claims in British Columbia. Most Canadian provinces have legislated subrogation rights by the Provincial Ministry of Health for hospitalization costs arising from personal injury accidents. However, Bill 22 goes far beyond the norm to allow for the recovery of all health care costs, including but not limited to those resulting from hospitalization.

If Bill 22 is passed, insurers handling claims in British Columbia will have to contend with an added layer of damages in every claim, and in particular, will have to ensure that the relevant notice provisions are complied with in order to close their files. US based insurers will see their BC claims fall into line with their experience south of the border, while Canadian insurers will see their exposure increase on virtually every claim.

It is not known when (or if) Bill 22 will brought into force, and whether it will be substantially revised. However, it will be important to keep track of its progress through the legislative process, as it has the potential to increase exposures dramatically, particularly on larger claims, or claims involving the need for future care that would previously have been covered by the Medical Services Plan and therefore not have been claimed by the plaintiff.

Readers with any questions or concerns regarding hospital claims or other bodily injury issues in British Columbia should feel free to contact Jonathan Hodes at (604) 643-3168 or by e-mail at jlh@cwilson.com.