New report: Fixed-payment insurance policies decreasing in Washington state

New report: Fixed-payment insurance policies decreasing in Washington state

Fixed payment insurance plans pay a specific amount -- $25 per doctors visit, say, or $200 a day for a hospital stay -- regardless of the bill. The patient pays the rest.

Plans like this allow employers a way to buy minimal coverage for employees. But it's not comprehensive health insurance. The medical bills may be much more than what the plan pays out.

Each year, we survey fixed-payment companies doing business in Washington state, and compile the results into a report on fixed payment insurance plans.

Here's what we're seeing:
  • Sales for group policies have decreased significantly, as has the number of group enrollees. (Group enrollees decreased by 88 percent.)
  • Among individual plans, the number of policies and enrollees both decreased.
The full report -- click on the link above -- includes a breakdown in the number of policies sold by each company.
Have a serious medical condition and need health insurance?

Have a serious medical condition and need health insurance?

Do you have pre-existing condition and need health insurance? Here’s how the new federally-funded Pre-existing Condition Insurance Plan helped a local Olympia man:

Dusty of Olympia, is a 28 year-old with lymphoma. When he was 25 he started his own business. In order to save money he chose not to purchase health care insurance - like others of his age, he felt he could take the risk. Six months later he was diagnosed with stage 4a lymphoma. He received treatment and owes over $200,000 in medical bills. He hadn’t been to the doctor in months because he could not afford any treatment that may be recommended and didn’t want to add to his debt.

Dusty learned about the new Pre-Existing Condition Insurance Plan (PCIP-WA) from one of our employees who met his girlfriend. Today, he’s enrolled in PCIP-WA and finally receiving the care he needs. Here’s what he had to say about the plan:

“As of this July this year, I’ll have been in remission for three years. The
Pre-existing Condition Insurance Plan lets me get all of my tests and everything
is showing that I’m still clear. Life is going really well! My partner and I are
expecting a baby in August and we’re excited.”

If you have a pre-existing condition medical condition and need health insurance – or know of a family member or friend in need, tell them about PCIP-WA today.

Who can apply?
How much does it cost?
How does the plan work?

Apply today!

How to look up info on your agent or broker (plus the answer to the quiz)

How to look up info on your agent or broker (plus the answer to the quiz)

Last week we posted a quiz question: How many agents and brokers are licensed in Washington state?

Out of three choices, about half picked the right answer: 118,415.

If you want to check your agent's credentials, find a broker in your area, look for past disciplinary cases, etc., take a look at our new online lookup for agents and brokers.

If you want to also look at company cases, check our insurance disciplinary orders search engine.
New Look for the Blog

New Look for the Blog

This is the second anniversary of the Ontario Insurance Law Blog and so we have decided to make some minor changes that will hopefully make it more user friendly. We just wanted to let you know that there may be some changes to the look of the blog but the content and purpose will continue the same.

Our goal, as always, is to create a forum for discussing insurance law. The goal is not to provide only case summaries but also to encourage discussion and commentary. We really appreciate receiving your feedback. If you have a comment to make, please email us and (with your permission) we will post your comment to the blog for others to read.

Best regards!

John Norton and Tara Pollitt
Treasury Department Gets Schooled on Stop-Loss Insurance

Treasury Department Gets Schooled on Stop-Loss Insurance

Earlier this year, I wrote about how the Treasury Department/IRS had taken a keen interest in stop-loss insurance as evidenced by a request for comment notice regarding PPACA code section 162 m. At issue is how stop-loss insurance figures into new tax rules mandated by the health care reform law restricting the tax deduction health insurance companies can take for compensation paid to certain employees.

More precisely, Treasury/IRS is suspicious that self-insured health plans with low attachment point stop-loss policies are really fully-insured plans in disguise. This was made clear in a meeting this week with senior Treasury Department and IRS officials when Treasury’s point person on the issue commented that “obviously products that look, smell and breathe like health insurance have our attention.”

While the audience was new the line of interrogation was not.

In meetings with HHS and DOL officials late last year in connection with the preparation of PPACA-mandated reports on self-insured group health plans, pointed questions were raised about “sham self-insurance,” which has become a popular catch phrase among the regulator class.

Of course, this suspicion did not materialize immaculately. The HHS/DOL team volunteered that they had been lead to believe that sham self-insurance is commonplace. While they did not disclose their sources, it is reasonable to believe that our friends from AHIP were among those whispering in their ears.

Getting back to the meeting this week, Treasury/IRS picked up where HHS and DOL left off although without any obvious bias. Stop-loss was clearly a new animal to them and my sense was that they were truly interested to understand it better.

Joining me was the “Seal Team Six” of stop-loss insurance experts who deftly responded to questions about low attachment point stop-loss polices by pointing out that this does fit the business model of carriers which control the vast majority of the marketplace.

As part of this discussion it was pointed out that contrary to the hype that small employers are moving to self-insurance in big numbers (and buying low attachment point policies) to avoid PPACA regulatory requirements, the facts don’t bear this out. In fact, the carrier representatives noted that that the lack of claims data is a major hurdle for companies with fewer than 100 employees for making the switch to self-insurance. They reported that the real growth in the stop-loss marketplace is actually coming from larger employers who may have not utilized stop-loss insurance in the past but are buying it now in response to unlimited lifetime limits.

Oh and by the way, the contention that there is a motivation among smaller employers to self-insure to avoid new regulatory requirements is specious because for non-grandfathered self-insured plans there really are no significant regulatory advantages.

We also highlighted the fact that states regulate stop-loss insurance separately than health insurance, PPACA regulatory guidance has acknowledged the difference, and legal precedent supports this position. All in all we made a pretty compelling case why stop-loss insurance should not be construed as health insurance.

While a contrary interpretation would create tax complications for stop-loss carriers, the broader concern is that if the IRS comes out with a new definition of stop-loss insurance this could completely disrupt the current regulatory environment.

Our audience maintained poker faces throughout the meeting (which I suppose is typical of tax people) so it was tough to get a read on how they were digesting our input. We’ll know for sure when the proposed rule comes out, but that won’t like be published for a while because the new compensation rules are not scheduled to take effect until 2013.

In the meantime, it should be instructive to those in the self-insurance industry that federal regulators are watching what is going in the marketplace. For companies pushing the envelope with “innovative” stop-loss products beware that you may be inviting negative attention.
Revival of the Special Circumstances Doctrine?

Revival of the Special Circumstances Doctrine?

Has the special circumstances doctrine been revived for limitation periods? We thought the Courts have been clear that under the new statute of limitations there is no exception for special circumstances. However, Wood J. recently held that special circumstances applied and granted an extension of time. In the case the plaintiff was trying to add defendants who were already third and fourth parties. Perhaps the exception will apply then only to when third and fourth parties are being added as defendants?

The case of Chodowski v. Huntsville Professional Building Inc., [2010] O.J. No. 3773, looks at the issue of joining parties after limitation periods have expired. In Chodowski, the motion is the result of plaintiff’s counsel, who had brought a timely motion seeking leave to join the third and fourth parties as defendants. It was not until the newly retained plaintiff’s counsel set the matter down for trial, that the omission was realized.
Justice T.M. Wood held that the test to be applied is a two part one in which the moving party must first satisfy the court that “no prejudice would result that cannot be compensated for by costs or an adjournment”. The second part, having been developed through the case law, requires that where a limitation period has expired, the moving party must demonstrate “special circumstances” which would justify extending the limitation period.

Justice Wood wrote that:

[I]t must be remembered that both defendants have been aware of their exposure since the day after the incident. Both were aware of the order allowing them to be joined as defendants in the main action, and both participated fully in discoveries as third and fourth parties.

The Judge found that plaintiff’s counsel’s prompt move for leave to amend, and the fact that plaintiff’s first counsel was a generalist “whose practice was not attuned to the requirements of tort litigation”, lends credibility to the argument that this was a sin of omission rather than commission.

The Court found that the failure to join the defendants in a timely fashion was fully explained.

Wood J. held that: The conduct of the proceedings as a whole and the nature of the mistake in that context are in my view special circumstances sufficient when coupled with the lack of real prejudice to the defendants, to justify an extension of time to issue and serve a new statement of claim on the defendant number company and Mid-North to March 1, 2010, the date of service.

Thanks to Alex Lacko for reviewing this case.
More than 1/4 of hospital emergency rooms in non-rural areas have closed in the past two decades

More than 1/4 of hospital emergency rooms in non-rural areas have closed in the past two decades

More than a quarter of urban/suburban hospital emergency rooms have closed in the past two decades, researchers have found.

The Journal of the American Medical Association published the study, titled "Factors Associated With Closures of Emergency Departments in the United States." The researchers found that the number of non-rural emergency rooms declined from 2,446 to 1,779 between 1990 and 2009. That's a decline of more than 27 percent.
Health insurance rates, by state

Health insurance rates, by state

What's an average health insurance premium?

The Commonwealth Fund recently came out with a lengthy report summarizing state trends in health insurance premiums and deductibles from 2003 through 2009. (The upshot: premiums rose 41 percent nationally during those years, while per-person deductibles jumped 77 percent.)

In Washington state, the study found, the cost of premiums rose 38 percent between 2003 and 2009, with family coverage costing an average of $12,758 here in 2009.

How's that compare to everyone else? About in the middle. In a list of the 50 states plus Washington, D.C., from highest family premiums to lowest, we come in 28th.

Also, the Kaiser Family Foundation does an annual survey on employer health benefits. The most recent one -- based on data from January through May 2010 -- found that premiums had risen 114 percent from 2000 through 2010, to a national average of $13,770. Worker contributions during the same time rose -- brace yourself -- 147 percent. (Here's a link to the gigantic full health benefits report.)
Recent cases from our consumer files

Recent cases from our consumer files

Got an insurance question or problem and live in Washington? We may be able to help. (We're the state insurance regulator for Washington.) Give us a call at 1-800-562-6900 or e-mail

What kinds of things do we deal with? Here's a sampling of cases from last month:
  • We convinced a health insurer to pay an additional $3,000 in surgery claims for a patient.
  • We got another insurer to pay more than $10,000 in claims that had been denied due to what the company maintained was a pre-existing condition.
  • We helped a Seattle consumer resolve claim delays on his mother's life insurance policy, leading to a $25,000 payment, plus interest.
  • When a health insurer repeatedly refused to pay claims because the patient's birthdate on the claim forms didn't match what they (erroneously) had in their records, we got the situation resolved and the claims paid.
  • And we helped mediate a dispute over a totaled vehicle's value, meaning that the consumer got nearly $1,000 more than originally offered.
Public Transit

Public Transit

This blog was prepared by Jennifer Stirton.

The Insurance Act has been amended by Bill 173, the Better Tomorrow for Ontario Act (Budget Measures), 2011, which received Royal Assent on May 12, 2011.

The amendments relate to incidents involving public transit and make two major changes. First, owners and drivers of public transit vehicles are not protected by subsections 267.5(1), (3) and (5) of the Insurance Act, which provide threshold protections and limit income loss claims, if the public transit vehicle does not collide with another automobile or any other object in the incident. In other words, public transit drivers and owners are not protected defendants unless there is a collision. The second major change is the addition of subsection 268(1.1), which provides that occupants of public transit vehicles who are injured are not entitled to statutory accident benefits if the public transit vehicle does not collide with another automobile or any other object.

These changes are clearly aimed at passengers who allege injury arising from incidents that do not involve collisions, such as sudden start/sudden stop claims. While it will reduce the cost of accident benefits being paid, it may result in an increase in tort actions against defendants who are no longer entitled to statutory protections.

New study: Dog bites account for 1/3 of homeowners insurance liability claims

The Insurance Information Institute, an industry-funded research group, has released a study saying that dog bites account for more than one third of all homeowners insurance liability claims last year.

The total: nearly $413 million, which averages out to more than $26,000 per claim.

The number of claims dropped slightly in recent years, although the cost of the claims rose.

According to the III, there were 15,770 dog bite claims filed last year. According to the federal Centers for Disease Control and Prevention, 4.5 million Americans are bitten by dogs each year, with one in five of those bites needing medical care.

Update: Also, here's a summary of Washington's dog bite liability laws from, yes, the website (Thanks to Fritz for passing that along, and all these links come with our usual disclaimer: linking ≠ endorsement.)
Rule 53.03 does not Apply to Accident Benefits Assessors - Beasley not Followed

Rule 53.03 does not Apply to Accident Benefits Assessors - Beasley not Followed

You may recall that we blogged about Justice Moore's decision in Beasley v. Barrand, which held that accident benefits assessors could not testify as they had not complied with the new r. 53 pertaining to experts. A new decision was released on April 26, 2011 which refused to follow Beasley.

In McNeill v. Filthaut, 2011 ONSC 265 (S.C.J.), the defendants sought to call DAC assessors to testify at trial. The plaintiff objected on the basis that they had not provided r. 53.03 compliant reports.

Justice MacLeod-Beliveau held that r. 53.03 does not apply to individuals retained by non-parties to the litigation.

Justice MacLeod-Beliveau held that since r. 4.1.01 (acknowledgment of expert's duty) refers to experts "engaged by a party", it does not apply to experts retained by non-parties, such as accident benefits assessors. Interpreting the rules otherwise potentially deprives the Court of relevant evidence.

There are now two different lines of decisions regarding the testimony of non-party experts. It will be necessary for the Court of Appeal to clarify this important area of the law.
Seattle woman pleads guilty to insurance fraud

Seattle woman pleads guilty to insurance fraud

A Seattle woman has pleaded guilty to insurance fraud after claiming $6,503 for auto damage that occurred prior to getting coverage.

Margaret Balderama told Seattle police and her insurance company, GEICO, that she was driving home shortly after midnight on July 5, 2010 when an unknown vehicle hit her 2005 Honda CRV and fled the scene.

She had renewed her auto insurance policy that very afternoon. (It had been cancelled for nonpayment more than 7 months earlier.)

The problem: Area residents told an investigator that they'd seen the car with extensive damage nearly 24 hours earlier than Balderama claimed -- and hours before she called GEICO to renew the lapsed policy.

Balderama pleaded guilty to a gross misdemeanor charge of insurance fraud on April 25th. Sentencing is slated for May 13th.
Free help with insurance complaints, questions and problems

Free help with insurance complaints, questions and problems

We offer free insurance help to Washington state residents. (We won't try to sell you anything; we're the state agency that regulates the insurance industry.)

You can call us at 1-800-562-6900 or e-mail We have staff insurance experts who can answer questions or help you file a complaint about an insurance company or agent.

In many cases, you can even track the status of a complaint online, seeing what we send to the company, their response, etc.

(Not a Washingtonian? Contact your state's insurance regulator.)

Here are some real-life examples of the sorts of cases we've handled recently:

-A business owner near Yakima was hosting a business event, but couldn't get a copy of her insurance certificate from her company. With time running out, she had to buy additional coverage to make sure she was covered. She complained to us, and we got the company to refund the cost of the extra coverage.

-An insurer offered $1,695 for a totalled vehicle. We helped get the consumer $3,250 -- plus tax, title and license fees.

-When a Puget Sound man's trip was delayed, boosting his costs more than $7,000, his travel insurance company paid him $3,266. We got them to boost that by an additional $4,035.

-We helped speed up payment on a delayed claim for a mobile home fire. The amount: $74,362.
Costs to Unrepresented Litigant

Costs to Unrepresented Litigant

Mustang Investigations v. Ironside et al, 2010 ONSC 3444 (Div. Ct).

Thanks to Alex Lacko, articling student, for preparing this case summary.

The plaintiff appealed from a costs order in which the motion judge awarded the self-represented defendant a counsel fee of $20,000 on the basis that he had done work ordinarily done by a lawyer.

The parties made written submissions as to costs. Mustang submitted that Ironside should receive costs limited to disbursements in a net amount of $1,541. Ironside delivered two bills of costs, the larger one for $208,138.40, inclusive of disbursements. The motion judge disallowed $87,500 claimed by Ironside as being not a proper claim for costs. The motion judge then considered the leading authority on costs to be awarded to unrepresented litigants, Fong v. Chan (1999), 46 O.R. (3d) 330, (C.A.). The motion judge correctly set forth the two principles enunciated by Sharpe J.A. and the Court of Appeal in that case in the following language:

First, the self-represented litigant should not recover costs for the time and effort that any litigant would have to devote to the case. Second, costs should only be awarded to those litigants who can demonstrate that they devoted time and effort to do the work ordinarily done by a lawyer retained to conduct the litigation and that, as a result, they incurred an opportunity cost by foregoing remunerative activity.

The motion judge interpreted the second principle as requiring a self-represented litigant to simply show that he or she did work ordinarily done by a lawyer without any reference to incurring an opportunity cost by foregoing remunerative activity.

The issue on appeal was whether the motion judge applied the correct principles for awarding costs to a self-represented litigant.

Jennings J. delivered the judgment of the Divisional Court and found that a number of cases, while purporting to apply Fong, in fact introduced a “spin” on Sharpe J.A.’s proviso to the second principle which he found troubling.

Jennings J. found that the motion judge erred by ignoring the proviso regarding an opportunity cost and further, awarding the self-represented litigant the partial indemnity costs that the plaintiff could reasonably be expected to have paid to a lawyer had one been retained by Ironside.

Justice Jennings stated that the language used by Sharpe J.A. was clear and that in order to receive costs, a lay litigant must demonstrate (1) that he or she devoted time and effort to do the work ordinarily done by a lawyer, and (2) that as a result, the litigant incurred an opportunity cost by foregoing remunerative activity. He further stated that if an opportunity cost is proved, a self-represented litigant should only receive a moderate or reasonable allowance for the loss of time devoted to preparing and presenting the case.

Several trial judges as well as a master, seem to have interpreted Fong as saying that even in the absence of proof of an opportunity cost, one may assume that because the lay person was involved in the litigation preparing material that might otherwise be prepared by a lawyer, he or she should nevertheless be entitled to nominal costs. Jennings J. wrote that:

“With great respect to the master and those judges, I’m unable to find that the language in Fong permits an award to be made without the self-represented litigant demonstrating that, as a result of the lawyer-like work put in on the file, remunerative activity was foregone. Simply stated, no proof of opportunity cost, no nominal costs available.”

Jennings J. further stated that in the case that an injustice will result, he had two responses:

(1) It is difficult to see any injustices in compensating someone for a loss not incurred; and

(2) Regardless, the principle of stare decisis does not permit this court, or judges sitting in motions, or masters, to modify a decision of the Court of Appeal.

The appeal was allowed and the award of $20,000 for counsel fee on a partial indemnity basis was set aside.
University Place man pleads guilty to insurance fraud

University Place man pleads guilty to insurance fraud

A University Place, Wash. man has pleaded guilty to felony insurance fraud after lying about the cause of a Pierce County crash that damaged his Jeep.

Warren Gardinier, 22, was sentenced on April 20th to 40 days in jail (concurrent with an unrelated firearms charge) and ordered to pay court fees and a victim penalty assessment.

On Dec. 9, 2009, Gardinier told the Tacoma Police Department that another vehicle had clipped his red 1996 Jeep Grand Cherokee, causing him to spin out of control, into a fence and then into a tree. He and a passenger sustained minor injuries. The vehicle was insured by his 26-year-old sister for liability coverage only. (Liability coverage will pay for damage you cause to someone else or their property, but not damage you cause to your vehicle or yourself.)

Gardinier called his sister. She called State Farm 36 minutes after the wreck and added uninsured motorist coverage.

Five days later, the two told State Farm the damage stemmed from a hit and run collision Dec. 10. State Farm paid $4,523 for the damage to the Jeep.

Unbeknownst to Gardinier and his sister, however, a witness had seen the crash and called 911. The witness -- who followed the Jeep and got the license plate number -- said there was no other vehicle involved. He said that Gardinier's Jeep had been speeding erratically, fishtailing, and driving off the shoulder and across the road. After several swerves, the witness said, Gardinier's Jeep crashed into the fence and rapidly left the scene.

That 911 call took place before Gardinier's sister called State Farm.

Gardinier's sister agreed to pay full restitution to State Farm. When she has paid that in full, an insurance-fraud charge against her will be dismissed.