With the pending changes to the SABS, tort adjusters will undoubtedly be called upon by Plaintiff counsel to make advance payments to cover such things as medical expenses, lost wages and attendant care. Seriously injured Plaintiff’s facing a combined $65,000 limit for medical, rehabilitation and attendant care benefits will start looking for funds from the tort defendant in advance of a settlement or trial. With a five year limit set to be imposed on non-catastrophic Plaintiffs to access these benefits, it is conceivable that many Plaintiffs will have either used up, or no longer be entitled to receive such funds, before their cases get to trial.
The benefits of an advance payment from the defendant’s perspective may not be obvious. Traditionally, there has been reluctance to consider such requests, unless there is a proven shortfall in AB funding along with a documented need for further funds. The notion of an advance payment generating “good will” with the Plaintiff and fostering a more “co-operative relationship” between the parties is rarely a convincing argument for a tort adjuster.
A more compelling reason to make an advance payment is to assist in the recovery. Faced with a situation where AB funding is running out, or the 5-year anniversary of the accident is fast approaching, a tort adjuster might consider making an advance payment to offset ongoing medical costs. Medical support in the form of treatment recommendations, along with invoices and receipts evidencing ongoing attendance, must always be sought. Efforts made to help an injured Plaintiff further rehabilitate could lead to a reduced general damages assessment and a quicker return to work.
There are situations where advance payments are statutorily required. The legislative framework in Ontario requires an insurer to make an advance payment for income loss in certain circumstances. Subsection 258.5(2) of the Insurance Act provides “if the insurer admits liability in respect of all or part of a claim for income loss, the insurer shall make payments to the person making the claim pending determination of the amount owing”. Subsection 258.5(3) explains that the amount of the advance payment is to be based on the insurer’s estimate of the amount owing in respect of the claim for income loss. Accordingly, provided that liability has been admitted and the plaintiff is advancing a claim for income loss, tort adjusters are statutorily mandated to make advance payments to an injured plaintiff; failure to do so is considered in awarding costs.
In summary, advance payments need to be based on a realistic appraisal of a plaintiff’s case. Responding to requests for advance payments should be made after the case can properly be assessed. At a minimum, this will require documentary and oral discoveries to have taken place. Advance payment requests by plaintiff counsel can also serve as a stepping stone to meaningful settlement dialogue. It is anticipated that such requests will start to be the norm, as opposed to the exception, given the pending changes to the SABS.