MBA (MPI) 1-26 RESPONSE€¦ · August 4, 2010 MBA (MPI) 1-26 Attachment A Call Centre Scripts Physical Damage Claims Subrogation A subrogation claim involves a negligent 3rd Party

August 4, 2010 Information Requests – Round 1

MBA (MPI) 1-26 - 1 -

MBA (MPI) 1-26

Produce all relevant training documents, procedural manuals, and telephone scripts relating

to subrogated claims.

RESPONSE:

Enclosed are copies of:

• Call Centre telephone scripts relating to subrogated claims;

• Training materials relating to subrogated claims.

The documents have been edited to remove names of individuals and screen prints with

client information. The Subrogation Manual has not been provided, as it contains internal

processes, release of which may compromise our ability to successfully subrogate.

August 4, 2010 MBA (MPI) 1-26 Attachment A

Call Centre Scripts

Physical Damage Claims

Subrogation

A subrogation claim involves a negligent 3rd Party that is NOT A MANITOBA INSURED VEHICLE.

ex. a vehicle registered/insured out of province negligent for causing damage to a MB. insured vehicle, a private individual or company negligent for causing damage to a MB insured vehicle (ex. recent electrical repairs completed by a repair facility caused an electrical fire, gas attendant/repair facility who may be negligent for not properly closing the hood which caused it to fly open resulting in damage, etc.) or Vandal who have been apprehended. Subrogation is not Involved When a Negligent 3rd Party is Another Manitoba Insured Vehicle.

When a company or an individual (including apprehended vandals) not insured with MPI is negligent in causing damage or injury to a person or vehicle insured with MPI, MPI will attempt recovery on behalf of the insured, assuming MPI has an interest in the loss (Damage must be more than the Insured's deductible).

The deductible will apply and will be refunded if we are successful in recovering the damage amount from the responsible party.

Complete the CARS claim as normal up to the up to the Related Parties Folder.

CARS may not always blue flag this type of claim. If this is the case, a Call Rep must add a blue flag(see Adding/Removing Flags) and book it in for an estimate/Adjuster appointment. Because MPI will be dealing with a different Insurance Company (not MPI), a statement is required by the Customer.

Select the Related Parties Folder (left side of screen)

Click on Add Related Party from the Related Party List window Click on the arrow to the left of Add Role and select Subrogee (this will

automatically trigger a VAN notifying Special Accounts of the Claim) Complete all the information on the Subrogee (name, phone, numbers, addresses

etc.) If the Subrogee is a Company, check off the Company box in the source field (above the Date of Birth field). Checking off the Company box allows Special Accounts to accurately isolate companies form individuals. Click Apply (this is done for each Subrogee.


If the caller has the name of the Subrogee's insurance company, this information can be added in NOTES.

If the caller does not have the information on the Subrogee (ex. Vandals apprehended and the police have all the information), select the Police Report Tab in the Loss Details Folder instead of the Related Parties Folder and enter a comment advising the I.D. of the Subrogee is Unknown. Click on the Notify Subrogation button (this will trigger a Van to notify Special Accounts of the possible Subro claim).

Select the Damage Folder

Complete the Damage Tab as usual In the Remarks section, document that photos of the damage are required as

possible subrogation is involved

Complete the rest of the claim as normal selecting all the necessary folders/tabs (Appointment/Adjuster Folder, Scripts Folder, etc.).


Glass Claims

Subrogation (Glass)

A subrogation claim involves a 3rd Party that is NOT insured by MPI and is NEGLIGENT for causing damage to a vehicle that IS insured by MPI. For example: out of province insured vehicle, or a private individual/company or apprehended Vandal who is negligent for causing damages to a MPI insured vehicle. SUBROGATION IS NOT INVOLVED WHEN A NEGLIGENT 3RD PARTY IS ANOTHER MPI INSURED VEHICLE (see Types of Claims That are Treated as Physical Damage Claims).

Assuming MPI has an interest in the loss (damage must be more than the insured's deductible), MPI will attempt to recover the amount of the loss from the liable party. The deductible would apply and will later be refunded if MPI is successful in recovering the damage amount from the responsible party.

To register a glass claim involving subrogation, follow our existing procedures for registering a glass claim up to the Related Parties Folder. In the Related Parties Folder Select the Add Related Party button. In to Related Party Tab, select Subrogee in the Add Role field (this will trigger a VAN notifying Special Accounts of the Claim) and complete all the fields relating to the Subrogee.

If the caller knows the Driver's Licence or Customer number of the Subrogee, enter this information in the applicable fields and click on Find. This will automatically populate the information on the Subrogee.

You may have to manually add a Blue Flag for possible subrogation if CARS doesn't generate one.

In the Damage Tab, indicate where the damage is but do NOT complete the Repair Shop Tab. Because this is considered a contentious claim, the Customer will be attending a Claim Centre so the Adjuster will generate the Authorization and provide it to the Customer or fax it to the shop.

Advise the Customer that because this claim involves a company/individual that is not insured under MPI, we will require a written statement and pictures of the damage to support their claim. Schedule an estimate/Secondary Adjuster appointment following our regular procedures (refer to Contentious Glass Claim Appointments). Select Open in Wrap-up. Complete the rest of the claim as normal and recite the necessary scripts (refer to Registering a Glass Claim).

Customer does not have Information on the Subrogee but the Police do


If the caller does not have the information on the Subrogee (ex. vandals apprehended and the police have all the information), following the regular procedures for registering a subrogation claim but instead of completing the Related Parties Folder:

Select the Police Report Tab in the Loss Details Folder instead of the Related Parties Folder and enter a comment advising the I.D. of the subrogee is Unknown.

Select the Notify Subrogation button (this will trigger a Van to notify Special Accounts of the possible Subro claim).

Click on Apply

You may have to manually add a blue flag for possible subrogation. Complete the rest of the claim as noted earlier.

When a name has been updated in the CARS RSB, the Call Rep MUST document the change in File Notes. (ex. Changed Registered Owners name from Jane Smith to Jane Brown). If there is also an injury file involved, this must be noted in the Injury Claim (File Notes) as well. (For further information, refer to Changing Names and Addresses.


Claims

Subrogation

Whenever damage is caused by someone not insured by Manitoba Public Insurance, we will attempt to recover all damages from the responsible party.

Therefore, before we can present the claim against the responsible party, you will need to have your damage repaired and pay your deductible to the shop.

Manitoba Public Insurance has no right of recovery until a payment is made on your behalf.

If we are successful in recovering from the responsible party, you will get your deductible back.

I will make you an appointment with an Adjuster who will take a statement from you and take pictures of the damage to support the claim.

What if the damage is less than my deductible?

It is only when the damage exceeds the deductible that Manitoba Public Insurance is involved.

The deductible is the portion of the claim for which you are responsible. You will have to pursue the claim against the responsible party on your own.

What if I need a replacement vehicle?

Your policy does not provide you coverage for substitute transportation. You may be able to make a claim against the other party's liability insurance for

the loss of use of your vehicle. Please do whatever you can to keep your expenses to a minimum as the other

insurance company will only pay what they consider to be reasonable expenses. Please make sure that your Adjuster is aware that you will be making a claim for

Loss of Use of your vehicle.


CARS

Subrogation Notification VAN

When the role of subrogee is added to any party on a claim (e.g. a driver, customer, etc.):

A "Review Party in Claim" task will be created in the Special Accounts workgroup To Do List, and

An email message will be sent to the generic Special Accounts Outlook mailbox when the claim is wrapped up or validated.

Special Accounts will monitor their workgroup To Do List. When this task appears the list, it will be up to the Special Accounts department to determine what (if any) action is required on the claim and to notify the adjuster as required


Switchboard

The Inter-Provincial Records Exchange System (IRE)

IRE (Inter-provincial Records Exchange, previously called IPRES) is a computer network system that enables authorized users to obtain current driver's licence and vehicle registration information throughout the Canadian provinces as well as the Yukon and Northwest Territories.

The Types of Searches Available through IRE

The types of searches that are available include:

Vehicle licence number Serial number (VIN) â€“ With the implementation of the Total Theft Initiative,

Switchboard Operators will be searching by serial number for total losses that occurred outside of Manitoba.

Driver's licence Last and first name, middle initial, birthdate, and sex

Requests can be sent to a specific province or all provinces can be searched globally for a match.

Information Obtained through IRE

Information that can be obtained include:

Information regarding the most current driver's licence and client number in the database:

o Name and address o Licence effective and expiry dates o Licence class and status o Restrictions and conditions o Any suspensions as well as the effective and expiry dates of the

suspensions Information with respect to the most current plate number or vehicle serial

number in the database: o Owners name and address o Vehicle status (ex. stolen, written off, sold) o Plate status (ex. active, suspended, lost) o Registration status (ex. active, cancelled) o Vehicle description

The information that is not available through the database is: o The previous status of a driver's licence or vehicle registration o Insurance information


o Driver's trailer records

Why the Call Centre uses IRE

The Call Centre uses IRE to confirm OUT OF PROVINCE driver's licences, and vehicle information.

In addition, with the implementation of the Total Theft Initiative, the Call Centre (Switchboard Operators) will be searching by serial number for total losses that occurred outside of Manitoba (OUT OF PROVINCE). The Total Theft Initiative's goal is to investigate claims more thoroughly to identify insurance fraud. One of the objectives is to do more background checks on claimants. The SIU department has asked that an IRE search by the vehicle serial number be done on all theft claims reported to Winnipeg Centres.

IRE cannot be used to confirm driver's licences, vehicle information or serial number information for jurisdictions other than in Canada.

Situations where an IRE request is sent include:

When the Out of Province driver's licence (driving a Manitoba insured vehicle) needs to be confirmed.

When a Manitoba Insured vehicle is involved in an accident with an Out of Province vehicle and the Manitoba Insured did not get enough information on the Out of Province party. (i.e. only got a plate number but did not get the name or address of the Out of Province party). Sending an IRE request to obtain the information in this situation, will speed up the subrogation process for our Insured.

When a claim is registered in CARS involving an Out of Province driver, the system will automatically send an IRE request and blue flag the file for an Adjuster appointment. The request is sent to the designated Call Centre staff with access to IRE (Switchboard Operators). The requests will be displayed in the staff's CARS "To Do List".

When a claim is registered in CARS involving an Out of Province 3rd Party, the Adjuster handling the claim may or may not require more information on the 3rd party. When more information is required, the Adjuster requests the IRE by creating an Event through CARS which is delivered to the designated staff's CARS "To Do List".

Beginning on Nov 14, 2001, Total Theft or Attempted Theft claims will require an IRE search by serial number completed to identify vehicles that have been total loss outside of Manitoba.

After the claim has been registered, the Claim Centre Clerical staff requests the IRE by creating an event through CARS which is delivered to the designated staff's CARS 'To do List". It is expected that there would be about 40 of these requests made per day.


Because the requests will be delivered in all of the Switchboard's "To Do List", a schedule of who will be responsible for completing the IRE requests on certain days/weeks has been made up. Having a schedule helps to eliminate the possibility of the request being completed by more than 1 person.

IMPORTANT:

Example: I notice a request in my "To Do List" and complete it. At the same time, someone else noticed the request in their "To Do List" and completed it. Therefore, the request would be completed twice.

How IRE Works

IRE can be imagined like a wheel where all the motor vehicle and driver's databases for each province and territory are situated on the circumference of this wheel. The hub (centre) of the wheel is located in Quebec and acts as a controller.

When a search is made for the request, the request is sent to Quebec first. The controller (program) in Quebec dispatches the request for the search to the appropriate province. The provinces' database searches for the information requested and the information is then sent back to the controller (program) in Quebec. Each province has unique codes and meanings. When the information is sent back to the controller (program) in Quebec, the controller then translates these unique codes and meanings so that they will be compatible with IRE's standardized codes and meanings.

A data dictionary of all the standardized codes used in IRE along with their associated descriptions is provided in the IRE manual. Each claims location has an IRE manual. If certain codes or meaning cannot be made compatible with IRE, the province will provide specific comments at the bottom of the screen.

Standardized Codes it Identify the Provinces

The only code that the Call Centre has to be concerned about is what code to use to identify the province when completing the request.

Below is the list of codes we would use to identify the applicable provinces:

PROVINCE CODES

ALBERTA AB

BRITISH COLUMBIA BC

MANITOBA MB

NEW BRUNSWICK NB

NEWFOUNDLAND NL

NORTHWEST TERRITORIES NT


NOVA SCOTIA NS

NUNAVUT NU

ONTARIO ON

PRINCE EDWARD ISLAND PE

QUEBEC QC

SASKATCHEWAN SK

YUKON TERRITORIES YT

All Provinces XX*

* (see important note below)

When a province does translate their codes into the standardized format, these codes would appear in brackets on the screen, (i.e. Driver Licence Class - (A.G.). The Adjusters will refer to the IRE Manual for specific meanings for these codes.

When you want to do a search for all Canadian jurisdictions (example: serial number search for total theft initiative), use XX.

Hours of Operation

IRE is available 24 hours a day. However, because IRE is accessed through IMS, you are restricted to the hours that IMS is available. The Call Centre will have the reply sent to the applicable Claim Centre within 24 hours of the request being made.

Purging Requests and Responses

All requests made and responses received are stored on 2 respective databases at the Motor Vehicle Branch. Be sure to obtain a screen printout (or paste into the CARS claim) of all necessary information.

IMPORTANT

IRE will automatically delete the requests and responses on the second day from the date of submission if you did not delete them yourself by this time.

In addition, because of the time limit for deletion, it is critical that the Total Theft Initiative IRE serial number searches as well as the other IRE searches are completed within that time frame. Otherwise, what would happen is that they would be deleted, and we would have to do them all over again from the beginning.


Manitoba Public Insurance has been allocated a certain amount of disk space to store this information. Ensure that all requests and responses are deleted once you are through with them. Retaining unnecessary information would eventually require MVB to increase Manitoba Public Insurance's disk storage size and therefore, increase our costs to use this system.


Physical Damage Claims

Collision with Domestic or Wild Animals

Effective March 1, 2009, All Perils Deductible coverage increased to include domestic animals in the wildlife collision damage waiver. This change applies to losses occurring on March 1, 2009 or later.

Collision with Domestic Animals

A collision with a domestic animal is treated as a regular single vehicle collision. In the Loss Details folder:

1. On the Loss Details tab, select Collision with domestic animal from the Loss Details drop-down menu.

2. Click More beside the Loss Details field to open the More Details window to record the type of animal (dog, cow, etc.).

3. In the Peril field, select Collision With Wildlife. 4. Select Not Responsible as the Preliminary Liability Assessment regardless if

the animal is alive or dead when the loss occurred. 5. Open the Related Party folder and select the role of Subrogee.

When adding the Subrogee role, if the domestic animal ownerâ€™s name is not known enter "unknown" in the First Name field in the Related Party folder.

Enter whatever information the caller has in the appropriate fields. It is imperative to record any and all information relating to the domestic animal. The Subrogation Indicator will be generated once the First Name field is populated. Adding information under the Related Party tab will also ensure a blue flag is generated and a contentious adjuster is assigned to handle the file.

CARS will automatically Red Flag the file for confirmation of collision with a domestic animal if the customer has extension deductible ($100, $200, or $300). In the Remarks section of the Damage tab, the Call Rep must document that the estimator is to confirm collision with a domestic animal for all non-glass animal claims.

Confirmation that the customer was involved in a collision with an animal is required in all cases:

Where the customer has an extension deductible ($100, $200, or $300), Manitoba Public Insurance must verify the claim involved an animal in order to waive the deductible.


Regardless of the deductible limit the customer carries ($500, $300, $200, $100), Manitoba Public Insurance must still confirm whether or not this accident should or shouldn't be counted as an "at fault" accident against the driver.

Once it is confirmed that a domestic animal was involved, the loss has no effect on the customer's driving record or merit discount level.

If it is determined that domestic animal was not involved, the customer may be subject to an accident surcharge and possibly the loss of the merit discount.

Normally, we advise the customer to wash the vehicle prior to having an estimate done. However, for this type of claim, advise the customer to leave the vehicle and any remnants of the animal undisturbed so that the estimator can confirm collision with a domestic animal. If they have any concerns about losing evidence, advise the customer to contact their adjuster for direction. You may also advise the customer that our estimators are experts in assessing vehicle damage.

Domestic Animal Damages a Parked Vehicle

All claims involving damage caused by domestic animals must be blue-flagged for adjuster investigation. If there is negligence on behalf of the animal owner, recovery may be possible.

1

SPECIAL ACCOUNT SERVICES

Presentation for Associate Adjuster Training

What is Subrogation?

Subrogation – to substitute. Upon indemnification, MPI steps into the insured’s shoes and assumes their right of recovery.

August 4, 2010 MBA (MPI) 1-26 (b) Attachment

2

Special Account Services

Room 929 in City Place – 36 Staff y

Aggressively pursue recovery on claim files where subrogation rights exist

All Claims locations forward their recovery files to Special Account Services to conclude recovery

Administrative Services

Clerk Typist IVAdministrative Services

Clerk IIIClerk III

Clerk Typist II Clerk Typist II

PC End User Support Clerk Criminal Information Officer

Clerk Typist II Clerk Typist II

Clerk II Skip Tracer


3

Statistics

MPI recovers $12.8 million anually

Special AccountServices recovers $8.8 million annually.y

Claims recovers $4.0 million annually

We classify claims into three types:

Special Account Services recovered $9.5Special Account Services recovered $9.5 million in 2008-09:

Collision 76.2%

I j 16% Injury 16%

Criminal 7.8%


4

Special Account Services -Four Sections:

Manager

Assistant Manager– Subrogation Recovery Services

– PIPP Recovery Services

– Secured Debt Services

– Recovery Legal Services

Subrogation Recovery Services

SupervisorPIPP and Subrogation

Recovery ServicesRecovery Services

Senior Subrogation Specialist

Subrogation Specialist

Senior Collection Officer

Senior Subrogation Specialist 10




Senior CollectionOfficer




5


Collision Recovery From Individualsy

Breach – suspended/lapsed driver’s license, impaired, etc.

Uninsured - no insurance, failure to renew ,or make a time payment, residency.


Businesses/Insurance Companies

Negligence of another party not insured by MPI

Out of Province Motorist G li bilit C h M i i litiGarage liability, Car wash, Municipalities,

Semi Trailers, Construction Companies Farmers’ Livestock


6

How Do I Handle Files Involving:

Breach

Uninsured

Negligence Claims g g

Your Responsibility

Investigation - statements - insured, driver, it di ith h t li twitnesses, diagram with photos, police report

Determine liability, determine coverage

Denial letters

Input recovery indicators

Add Subrogee(s) as related partyAdd Subrogee(s) as related party

Adjust the losses (1st and 3rd party)


7

You Can

Attempt recovery, if straightforward

Procedures state to make a recovery attempt and if met with opposition, send to Special Account Services

Refer to Special Account Services

All files where the first attempt has been punsuccessful

Contentious liability cases (splits)

Files that are major and involve a number of claims

Car – pedestrian / cyclist accidents

Any recovery that requires a promissory note


8

Process

Add subrogee(s) related parties to CARS and subrogation gindicator

Complete a thorough investigation

Prepare a summary: - quantum

f b i- reason for subrogation

Supervisor approval

Make primary and send the liable physical file to Special Account Services

Pointers

Damage below the deductible - we don’t recover

We include personal claims as a courtesy, but there is no guarantee of recoveryg y

They could take their own action - small claims court


9

Your Assistance

Further investigation

Debtor’s information –DOB, employment,

h bphone numbers, passengers, friends

Car – Pedestrian / Cyclist Accidents Direction –

Section 153 of HTA puts onus on the motorist

Solid proof - persuasive detailed investigation

Take into account age of cyclist/pedestrian and any injuries

Do not send a demand letter

Limited success

Complaint generator

Worth the effort? Cost effective?


10

DON’T

Don’t promise deductibles, especially in car- pedestrian cases or other contentious cases - no false hopes

Don’t negotiate payment terms

Don’t advise debtors of low payment terms

PIPP Recovery Services

SupervisorPIPP and Subrogation

Recovery Services

Senior Subrogation Specialist

Senior SubrogationSpecialist




11

PIPP Recovery Services

Tort & PIPP

Manitobans injured by the negligence of an out of province motorist

We do not recover from other Manitobans

Complex recoveries involving liability & p g yjurisdictional issues

Potential to recover large losses

Criminal Recoveries

Car theft

Joy ridingVandalismFraud 2007 -08 Fiscal Year

$ Cash recoveries: $695,341.00 Promissory Notes: $748,168.00

Judgments: $2,588,362.00


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Criminal Recoveries

Epidemic proportions of car theft p p p

Potential of 25 million dollars on car theft alone each year (excluding vandalism)

Injury costs add on millions (can’t recover)

Multi thieves & joy riders j y

11,000 thefts annually

Prolific thieves - Gangs - Rings

Your role - Criminal Process

Suspect is known:Change the subrogation indicator to “Yes”Click the “Notify Subrogation” box in the Police

Report tab in CARSHandle your file normally, subject to any

deductible Keep your physical file at the centre – Special p y p y p

Account Services may call it in at a later dateMake the primary resource in CARSClose physically


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DON’T on Criminal Cases

Don’t refund the deductible

Don’t give unrealistic expectations to claimant re: recovery of their deductible

Don’t make recovery attempts

WHY?

Deductible - recovery ychances could be slim or a long time process

Special Account Services will handle all recovery on Criminal Cases

Our data base may have other debts


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Special Account Services’ Role

Set up a criminal file p

Monitor the charges etc.

Do the financial checking

Recover, sue or abandon

Handle the deductible refund, if recoveredHandle the deductible refund, if recovered

Handle calls from the insured on subrogation

Secured Debt Services

Supervisor\Criminal Recovery and Secured Debt Recovery


Sr Collection Officer Sr Collection Officer

Collection Officer Collection Officer Collection Officer Collection Officer


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Secured Debt Services

Collection processp

Promissory notes

Judgements

Restitution orders

Skip tracing

St ti tiStatistics

Special Account ServicesWill Handle:

Promissory Notes y

Determine ability to pay

Complete financial background

N iNegotiate payments


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Our Recovery Leverage

Driver’s license - RTR (refuse to renew)

Judgments

Driver’s and vehicle suspensions

GarnisheeGarnishee

Enforcement across Canada

AR Inquiry - CARS:

Alphabetical listing of subrogees

CARS notifies Special Account Services when a subrogee makes a subsequent claim

Special Account Services will put notes on your file advising the person is indebted to MPI

Good information to have for your own claim

Adjusters to check AR Inquiry manually when issuing a hand draft


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Setting Off - Scooping

AR Inquiry in CARSi ll b Lists all subrogees

Screen pops up to contact Special Account Services prior to payment

We will confirm amount and give directiona d g ve d ect o

Our portion is payable to MPI - Section 56(2) of the Act

Legal Staff

ManagerHead of Recovery

L l S iLegal Services

Legal Assistant Special

Investigator

Legal SecretarySubrogation SpecialistCriminal

Solicitor 1

Legal Processor II

Solicitor

Legal Processor I

Solicitor


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Legal Unit

Internal legal unit gspecialized in subrogation, civil suits, and bankruptcy

Complete and thorough investigations required from Claims staff

Looking For Help

Try our online Subrogation Manual or Contact: Supervisor Supervisor

PIPP and Subrogation Secured Debt Recovery

Assistant Manager Manager


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Open DiscussionQuestions

Questions? Questions?


August 4, 2010 MBA (MPI) 1-26 Attachment C

RECOVERY LEGAL SERVICES SPECIAL ACCOUNTS & SUBROGATION

DRIVING UNDER THE INFLUENCE

1. COVERAGE

Drunk drivers receive insurance coverage for the damage they cause to others but not

for their own vehicle or the vehicle they are driving.

Driving under the influence is a breach of Part III coverage - see section 56 of

Manitoba Regulation 290/88.

Driving under the influence is not a breach of Part IV coverage - see section 87 of

Manitoba Regulation 290/88. Why not?

2. SUBROGATION

If there is a denial under Part III and coverage under Part IV, when does the

opportunity to subrogate arise? When can MPI recover insurance monies paid?

Against a non-owner driver for the damage caused to the vehicle they are driving.

If MPI pays damages to the owner it can bring a subrogated action against the

impaired driver, so long as it can pass two tests:

1. that the driver was “under the influence of intoxicating liquor or drugs

to such an extent as to be, for the time being, incapable of the proper

control of the motor vehicle” (see section 26(2)(a)(v) of The Manitoba

Public Insurance Corporation Act).


2. that the driver’s negligence caused the collision. MPI must be able to

prove the collision was caused by the driver’s negligence in order to

obtain judgment in the subrogated action.

A. Driving Under the Influence

This is a threshold test. If MPI cannot establish that the driver was incapable of

properly controlling their vehicle then there is no right to subrogate against the

driver. Cases deal with alcohol but denial can also be based on incapacity due to

drugs.

Criminal Conviction

Section 23 of the Act provides that a driver is deemed to be driving under the

influence for the purpose of section 26 or the regulations if the driver is convicted of:

1. Operating a motor vehicle while impaired by alcohol or drugs (section

253(a) of The Criminal Code of Canada);

2. Driving over .08 (section 253(b) of The CCC), or;

3. Refusal to comply with a demand to provide a blood sample or

breathalyzer (section 254(5) of The CCC);

A conviction for these offences is conclusive proof of incapacity for the purposes of

section 26.

No Conviction

If the individual is not convicted, MPI needs to prove impairment and incapacity on

a balance of probabilities in order to allow MPI to sue the driver under section 26.

Proof of impairment is insufficient to meet the onus – MPI must establish incapacity

to properly control a vehicle because of alcohol or drugs.


MacGregor v. ICBC (1993 BC):

“Proof of impairment or of an illegal level of alcohol in the blood is not, by itself, sufficient. Nor is proof of drinking and negligence enough. The insurer must establish that in all the circumstances of a particular case, that there was incapacity to exercise proper control.”

Cases where Insurer proved incapacity

• Kowalyk v. Canadian Home Assurance - (1954 MB) Four beers at Yale

Hotel. Then split 2½ - 26 oz. bottles of Rye with 3 friends. Then drive to a

wedding in Komarno. Beer and whiskey were served. Then at 8:30

Wishnowski drives Kowalyk home. Evidence of speeding and zigzag

erratic driving. Wishnowski had a BAC of .190. Based blood tests and

clinical evidence of conduct prior to the collision, Wishnowski was driving

under the influence and did not have capacity to properly drive a vehicle.

• Baker v. MPI (1979 MB) – slurring, smell of alcohol, BAC of .210, bloodshot

eyes, admission of drinking, stagger, no explanation for driving on the wrong

side of the road.

• Runolfson v. Saskatchewan Government Insurance (1989 SK) –

Runolfson split a mickie of rum. Witness observed him speeding and

passing on a curve in the road. Paramedics noticed a strong smell of

alcohol. BAC was .170. However, BAC is only corroborative and there

should be additional clinical evidence of impairment (conduct, behaviour,

manner of driving or control of the vehicle).

• Pilot v. Tchourkine (2002 ON) – smell, glassy eyes, no explanation for the

collision (wrong side of the road).

• Park v. ICBC (1998 BC) – smell, bloodshot eyes, unsteady, BAC (of .170) was

not admissible.

• Co-operator’s General v. Mayer (2005 AB) – smell, ½ bottle of whiskey, BAC

of .285, no explanation for hitting well marked concrete posts which marked

the end of the lane.


• Hansen v. SGI (2008 SK) – Car stopped with its hazard lights on after a

dog was hit by another car. Hansen rear-ended it. After the collision

asked for a piece of gum and admitted she had been drinking. She smelled

of alcohol, had blood shot eyes, was unsteady on her feet and was slurring

her words. BAC was .150 and .170. The court dismissed her claim as both

clinical and corroborative evidence suggested she was in breach.

In each case the court held the driver was under the influence of alcohol and

incapable of properly controlling their vehicle.

Cases where the insurer failed to establish incapacity

• Best v. State Farm Mutual (1994 ON) - Bloodshot eyes, lost control, high

driving speed, fleeing the scene of the collision.

• Simon Hiebert v. MPI (1992 MB) – after golf tournament, between 5:45 and

8:00 p.m. 4½ Coors light beer, no alcohol at dinner, 3 Coors light beer after

dinner until 12:30 a.m., took 2 Coors light beers on drive home drinking one

at time of collision. The court found he was at or slightly over the legal limit,

but aside from speeding there was no evidence of improper driving, or indicia

of impairment.

• Ryckman v. MPI (1986 MB) – admitted drinking 4 beers, but no recollection

for 3 hours prior to collision.

• Suspicion is not evidence. The onus is on MPI to prove impairment and

incapacity. Suspicion alone will result in the court dismissing the claim.

Just because someone is at .08 does not mean that the defendant cannot properly

drive. Success at trial depends on evidence of incapacity.

In order to establish incapacity, MPI will need to rely on evidence such as:

1. Evidence from witnesses regarding the amount of alcohol consumed and timing;

2. Breathalyzer results / blood tests;


3. Erratic driving prior to the collision; 4. How far had they been driving before the collision? How much traffic? 5. Signs of impairment after the collision (from witnesses and/or police

officers); 6. Confirmation that the defendant was driving.

B. NEGLIGENCE

Even after incapacity has been established thereby satisfying section 26, MPI must

still establish that the defendant was responsible for the collision.

When an impaired driver is rear-ended while stopped at a red light, MPI will likely

not have the ability to recover as the drunk driver was not negligent and did not

cause the damage. Absent other evidence, a court would not award judgment.

See: MacGregor v. ICBC (1993 BC)

Co-operator’s General v. Mayer (2005 AB)

Mercure v. Gilbert (2004 ON)

Once incapacity due to alcohol or drugs and negligence are established, a court will

award judgment against the drunk driver.

3. FALSE STATEMENTS

If the driver provides a wilfully false statement regarding impairment or the amount

of consumption, section 37 voids and invalidates coverage.

As part of the investigation, MPI should obtain a statement from the driver in which

the driver should commit to the amount of alcohol they consumed and over what

period of time, or state that they had not consumed alcohol over the period of the last

12/24 hours.

If an individual provides MPI with a willfully false statement, MPI can deny Part III

coverage and sue for Part IV coverage as they have forfeited and rendered invalid

their insurance coverage for the collision. Providing a willfully false statement


increases the amounts that MPI can recover. Lying makes things worse for the

defendant.

In order to commence a subrogated action to recover Part IV payments against an

owner and an action to recover Parts III & IV payments against a non-owner driver,

MPI will need to prove 2 (possibly 3) issues:

1. the driver provided MPI with a wilfully

2. the driver’s negligence caused the collision; and

false statement;

3. If the driver was also the owner of the vehicle causing the collision,

MPI will also need to prove that they were under the influence and

lacked capacity (not necessary to prove incapacity against non-owners

as the false statement itself provides grounds to subrogate under

section 26.)

4. CONCLUSIONS

ASSOCIATE ADJUSTER TRAINING

MODULE

COHORT PROGRAM

-SUBROGATION-

August 4, 2010 MBA (MPI) 1-26 (d) Attachment

-Cohort Associate Adjuster Training-

Referring Files to Special Account Services

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SUBROGATION

LEARNING OBJECTIVES:

Upon completion of this module, you will: • Be able to define Subrogation and identify those files where MPI

is subrogated to our insured’s rights of recovery. • Be able to identify those persons MPI is entitled to demand

recovery from. • Understand the importance of inputting a subrogation indicator

on a CARS file and on all the related files.

• Be able to determine if and when a file should be referred to Special Account Services for recovery according to established procedure and criteria.

• Have the ability to take a thorough statement and to gather

information necessary to establish a basis for further investigation and/or referral to Special Account Services.

• Recognize the importance of gathering sufficient information

for the purpose of inputting the Subrogee Particulars in the CARS file.

• Understand the significance of the A/R Inquiry and when and

how to access it.

• Handle files involving pedestrians or cyclists in accordance with the instruction herein provided and the Claims Inter-Departmental Memorandum dated May 3, 2002 on pages 24 – 26 of this module.




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Referring files to Special Account Services A. Definition and Importance of Subrogation ..........................................................4 B. Identifying Subrogation ...........................................................................................5 C. Subrogation Indicators ............................................................................................7 D. Subrogee Particulars ................................................................................................8 E. A/R Inquiry Listing .................................................................................................9 F. Hand Drafts .............................................................................................................10 G. A/R Inquiry Payment Warnings .........................................................................11 H. Applying Payments to Customer’s A/R Debt ..................................................12 I. Classifying Subrogation Files For Special Account Services .............................13 J. Subrogation Statements on Coverage Problems .................................................19 K. Useful Tips on Statement Taking .........................................................................22 L. Pedestrians and Cyclists ........................................................................................23 Appendices: a. Residency Breaches Involving a Right to Recover ............................................. 27 b. Procedure for Claims Involving Recovery from Drunk Drivers ......................30 Checklist Covering Memo and Authorization re: Non-Owners c. Sample Letter to Intermediary……………………………………………………36




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A. Definition and Importance of Subrogation The Claims manual defines subrogation as: “a legal process by which an insurer who has paid a loss pursues any rights of recovery against a responsible third party in the name of the insured.” The legal doctrine of subrogation entitles an insurer to step into the shoes of its insured and pursue recovery from any party whom the insured could have pursued to the extent of the compensation paid by the insurer to the insured. The doctrine was developed solely for the purpose of preventing the insured from recovering more than the loss. In short, the doctrine prevents double recovery. In addition to the legal doctrine of subrogation, Manitoba Public Insurance has the benefit of a statutory right of recovery as set out under section 26 of The Manitoba Public Insurance Corporation Act. Subsection 26(1) indicates under what circumstances the corporation is entitled to exercise the right of subrogation and subsection 26(2) sets out against whom that right may be exercised. The enforcement of the corporation’s recovery rights is an important financial activity required on all claims where rights of subrogation exist. Manitoba Public Insurance recovers nearly 10 million dollars annually. This amounts to about 2% of the average vehicle premium. The bulk of subrogation activity is handled by Special Account Services. Brandon Out of Province and Commercial Claims also handle subrogation claims. Claims adjusters in all locations are required to complete investigations prior to referring their files to Special Account Services. Special Account Services does not investigate claims.

Rather, it picks up the recovery function from the claims adjuster.

Special Account Services pursues MPI’s recovery claims. Decisions may include whether to accept compromise settlements, sue, or abandon these claims. Special Account Services also refunds any outstanding deductibles after recovery is made. All deductible refund inquiries from the insured should be directed to Special Account Services.




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B. Identifying When, Against Whom and How MPI May Pursue

Its Rights of Recovery 1. When Subsection 26(1) of The Manitoba Public Insurance Corporation Act (the Act) states

Subrogation 26(1) Upon making any payment of benefits or insurance money or upon assuming liability for such payments, the corporation is subrogated to and shall be deemed to be an assignee of all rights of recovery against any other person liable in respect of the loss, damage, injury, or death of every person to whom, or on whose behalf, or in respect of whom, the benefits or insurance money are to be paid; and the corporation may enforce those rights of recovery as provided in subsection (6) to the extent that the corporation has paid or has assumed liability to pay the benefits or insurance money.

So, in short, when MPI pays its insured, it becomes subrogated to and assignee of the insured’s rights of recovery. 2. Against Whom Subsection 26(2) of the Act states

When rights of subrogation apply 26(2) The rights conferred upon the corporation under this section apply only where the loss, damage, injury, or death for which the corporation has paid or has assumed liability to pay benefits or insurance moneys is caused or contributed to by the fault of …

The remainder of subsection 26(2) sets out those persons who the corporation may recover from through the exercise of all rights of recovery that its insured could have exercised against that person. Note that recovery is contingent upon establishing that the loss was caused or contributed to by the fault of the person.




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3. How Under the legal doctrine of subrogation, any recovery action by the insurer had to be brought in the name of the insured. This has been altered by our Act. Subsection 26(6) provides that MPI can bring an action in its own name against a subsection 26(2) person who caused or contributed to the insured’s loss. 4. Summary Generally speaking, whenever MPI pays an insured’s claim, it becomes subrogated to and assignee of all the insured’s rights of recovery against the person who caused or contributed to the insured’s loss. However, MPI does not pursue every person for recovery. It pursues subsection 26(2) persons, who are basically persons not insured by MPI or, if insured, are in breach of coverage for the loss. MPI may enforce those rights of recovery by bringing an action in its own name against that person.




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C. Subrogation Indicators As soon as a subrogation claim is identified, change the subrogation indicator from No to Yes on your file. Advise any third party adjusters to change their subrogation indicators if subrogation exists on their files. This provides important statistical information to our Finance Division. It also prevents subrogation files from being overlooked and closed without any recovery effort. If the subrogation opportunity does not exist as the investigation progresses, refer the file to your supervisor to change the indicator back to No. There are also three 1. Abandoned other indicator choices: 2. Recovered in Full 3. Recovered - Reduced Settlement These choices are self explanatory and can only be selected by Special Account Services or a Claims Supervisor at the final stage of subrogation.




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D. Subrogee Particulars Add the subrogee as a related party in CARS. This identifies the recovery potential and also allows Special Account Services to add the subrogee’s name to our A/R Inquiry listing.




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E. A/R Inquiry Listing The Accounts Receivable Inquiry listing (A/R Inquiry) is a list of individuals and companies indebted to MPI. CARS will automatically notify Special Account Services when a person on the A/R Inquiry makes a claim. Special Account Services will place a note in CARS or contact the adjuster for further instructions. The A/R inquiry is a valuable tool to use when a suspicious claim is presented. If the name appears on the listing, the individual has probably had a prior coverage problem. The individual may also owe IWS arrears or another debt, but the majority of names on A/R Inquiry are individuals indebted to MPI from prior claims.




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F. Hand Drafts When issuing a hand draft, always check the A/R inquiry listing in CARS manually. If a name matches or you are not sure, contact Special Account Services at before promising a hand draft to a customer. It is best to put in the last name only to widen your search. If you are checking a common name, you may also put in the first name. If you only put in an initial or a portion of the name, you must check off the partial checkbox – see below: A/R Inquiry Search Window




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G. A/R Inquiry Payment Warnings When a regular CARS payment is being made to anyone listed on the A/R inquiry, a screen will pop up to contact Special Account Services prior to proceeding with the payment.




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H. Applying Payments to the Customer A/R Debt When Special Account Services requires the payment to be applied to an outstanding debt: Special Account Services will advise if the entire payment or a portion of the payment is to be applied to a debt. Any amount Special Account Services requires has to be payable to Manitoba Public Insurance

. For example, if the cheque is for $5,000.00 and Special Account Services only wants $2,000.00, two separate cheques are required. One cheque is payable to MPI for $2,000.00, and one payable to the customer for $3,000.00.




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I. Classifying Subrogation Files for Special Account Services Subrogation files are classified into

four groups:

1. Criminal: Thief, vandal, joyrider, arsonist, fraudster, etc. 2. Breach: MPI insureds in breach of coverage. 3. Non MPI Third Parties: Non MPI insured third parties.

4. Uninsured Motorist: Damages caused by uninsured third parties.

1. Criminal Files Steps to handling a criminal

subrogation file and preparing it for a referral to Special Account Services:

- If you receive information from the insured or the police of any suspects caught or charged, change your subrogation indicator from “No” to “Yes”.

- If you have been made aware of a suspect but do not know the name, click

the notify subrogation check box on the police report tab in CARS (see next page).

If the insured or the police provide the name of the accused, please add the person(s) as a subrogee in the related parties tab in CARS. Clicking the notify subrogation box or adding the subrogee as a related party will notify Special Account Services of the suspect. Special Account Services will assign a resource to monitor criminal charges and add the suspect(s) to the A/R Inquiry listing in CARS.




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- Handle your file as normal and pay the claim. - Do not waive deductibles because there are suspects. Special Account

Services has to recover before a deductible is refunded. - Refer any subrogation or deductible refund inquiries to Special Account

Services at with their claim number. - Once you have completed and paid the claim, make in Special Account

Services the primary resource. -

Do not refer the physical file to Special Account Services on criminal files.

2. Breach Files Steps to handling a breach


- Once subrogation is identified or suspected, change your subrogation indicator from “No” to “Yes”.

- Add the subrogee’s name(s) to CARS as a related party. - Take statements from the driver, owner and intermediary, if applicable. - Take photos of the scene on contentious liability accidents or if you know a

photo of the scene is necessary to understand the circumstances. - Settle your claim (unless the Part Three claim has been breached). - Request permission to deny from your supervisor - Once approved, make sure a copy of the denial is hard copied in the file for

Special Account Services. - Once the T/P settles their claim(s), enter a subrogation summary in CARS

notes. At this stage, refer the file to your supervisor for approval to refer the file to Special Account Services. If approved, input a breach file summary in CARS notes and make the primary resource in CARS, sending the physical file to him as well. You do not have to arrange for the innocent party’s file to be referred as well, Special Account Services will call it in if they require it. You do not have to populate the Subrogation Detail Tab in the Related Parties. This tab is for Special Account Services’ use. *Sample Breach File Summary:




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The insured’s Part III claim was denied for driving while suspended. The insured had a suspended driver’s licence and rear-ended the T/P into a hydro pole.

Recoverable Part IV claim: $5,245.00 broken down as follows: T/P damages - $3,547.00, loss of Use $698.00, property (hydro pole) damage $1,000.00 Total recoverable $5,245.00 Denial letter with amounts to be determined returned unclaimed. (The denial went out before the T/P claims were finalized) There are specific procedures that apply to residency breaches and claims involving drunk drivers. Please refer to Appendices a and b for specifics. 3. Non MPI Third Party Files Steps to handling a non MPI third party


Non MPI insured third parties include: - any non MPI insured or out of province third parties - semi trucks - construction equipment - street cleaners - snow clearing equipment - car washes - domestic animals - pedestrians and cyclists - repair shops (garage liability) - municipalities - government insured vehicles unless insured by MPI Add the subrogee’s name(s) to the file in CARS as a related party. As the frontline adjuster you must complete a thorough investigation. Special Account Services relies completely on you to secure sufficient evidence to support its recovery claim. Liability may appear to be straightforward but obtaining acceptance from a non-MPI insured third party is often difficult. The more evidence we have, the less resistance we face.




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Witness statements are crucial. Always obtain a statement from our driver. Always follow up with witnesses by taking a statement or at least obtaining a voluntary witness report. Special Account Services cannot do its job without this information. Therefore,

referrals not containing these statements will be returned to you for further work.

Photos of the damage are also crucial. Please ensure estimators obtain photos of the vehicle damage on all subrogation files. Photos of the scene are almost always required unless the location and circumstances appear to be straight forward. After the investigation is complete, you can send a preliminary demand letter to the responsible party or their insurer if that information is on file. The C28 letter is very vague. In most cases, further information should be included: - accident time and location - third party vehicle description - third party driver - third party insurance policy number - third party licence plate number After the preliminary demand letter is sent, if payment is not forthcoming or you have not received a reply, refer the file to your supervisor, placing a subrogation summary in CARS notes (see example below). Repairs should already be completed to the insured’s vehicle. If referral of the file is approved, make the primary resource in CARS and send the physical file to him as well. You do not have to populate the Subrogation Detail Tab in the Related Parties. This tab is for Special Account Services’ use. *Sample Non MPI Third Party File Summary for CARS:

Part III claim; repairs $9,900.00. Ontario third party turned left in front of our insured.

Insured’s outstanding claims, $500.00 deductible and $850.00 in Loss of Use. Total recoverable $11,250.00 Demand to the T/P Ontario insurer sent with no response.




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4. Uninsured Motorist Files Steps to handling an uninsured motorist


- When a motorist causing loss to our insured is uninsured, follow the uninsured motorist procedures and establish a MPI Virtue Section 102 (UIM) file. (Refers to Section 102 of the Regulations 290/88R. The applicable section of the Manitoba Public Insurance Corporation Act is 39.)

- No payments are made from the original file for the uninsured motorist, so no subrogation indicator is required.

- Send a no coverage letter to the uninsured motorist with a hard copy in the

file and a copy on the UIM file. - On your UIM file, change your subrogation indicator from No to Yes. - Add the subrogee’s name(s) to the UIM file in CARS as a related party. - Take statements from the driver, owner and intermediary if applicable. - Take photos of the scene on contentious liability accidents or if you believe

a photo of the scene is necessary to understand the circumstances. - Continue to follow the UIM procedures. - Enter a subrogation summary in CARS notes (see example below). Refer the original file where no coverage existed and UIM file to your supervisor for approval to send to Special Account Services. If approved, make in Special Account Services the primary resource in CARS and send the physical file to him as well. You do not have to arrange for the innocent party’s file to be referred to Special Account Services who will call it in if they require it. You do not have to populate the Subrogation Detail Tab in the Related Parties. This tab is for Special Account Services’ use. *Sample Uninsured Motorist File Summary:

Suspended insurance policy - Customer failed to pay his time payment. The UIM ran a red light and broadsided our insured’s vehicle into a garage.

Insured’s vehicle claim total $10,000.00 (ACV - $13,000.00 less $4000.00 salvage plus $1000.00 in loss of Use).




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Garage owner’s claim - $500.00 (home insurance deductible portion only. The actual loss was $3000.00 with $2,500.00 being paid by the home insurer). Total recoverable $10,500.00 UIM Apps served to last known address but AR card returned unclaimed.




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J. Subrogation Statements on Coverage Problems Every subrogation file has the potential to end up in court where success or failure will often depend on your investigation, note taking, and, most importantly, statement taking. Taking statements preserves the memories of witnesses for testimony that may be needed for MPI to prove its recovery claim years after the accident causing the loss. The same can be said of your notes, which you will need to use to refresh your memory in court, possibly years after the loss. Both must be thorough, legible, and record all the facts necessary to supporting MPI’s recovery claim. Taking witness statements also helps Special Account Services determine the strength and weakness of the recovery claim or even if the claim is worth pursuing. In short, taking proper witness statements and notes is fundamental to your job. 1. Taking statements from the registrant/insured. Take a statement from the insured concentrating on events that led to the coverage problem. Did the insured realize they were in breach? If not, have them explain in detail what made them believe coverage was valid. If alcohol was involved, cover specific consumption (brand names of drinks and alcohol content, glass draft or bottled beer, how drinks were mixed and by whom, time frames, and anything the person ate that would affect impairment). You may want to refer to the “Recovery from Impaired Driver” Checklist in Appendix b for further guidance. 2. Taking a statement from the registrant/insured when their driver has a

coverage problem. What was the relationship with the driver and how long have they known the person? Did the driver have consent to use the vehicle? Did they ask the driver if he/she has a valid D/L? Have they seen them drive before? How often? What lead them to assume the person had a driver’s licence? If alcohol was involved, were the owner and driver drinking together? If not, was the driver sober when they gave the driver the keys?




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3. Taking a statement from the driver where the driver has a coverage

problem. How did they obtain the keys for the insured’s vehicle? Who allowed him/her to drive - if anyone? Did the driver tell the owner that he/she did not have a driver’s licence on this occasion or any other? How many times have they driven the owner’s vehicle before? Does the driver believe the owner knew (s)he did not have a D/L? If so, have the driver explain. Did the driver know (s)he was driving unlicenced or suspended? If not, have him / her explain why in detail. If alcohol was involved

, please refer to the “Procedure Concerning the Management of Claims Involving Recovery from Drunk Drivers” and accompanying Checklist and Authorization documents.

4. Taking a statement from an intermediary where their driver has a

coverage problem. An “intermediary” is a person who, while having the care, custody, and control of the vehicle with the registrant/insured’s consent, allows another person to drive the vehicle resulting in a claim. A classic example involves a father (registrant/insured) giving his vehicle to his son (intermediary) for the evening who in turn lets his unlicensed friend drive. An intermediary has a duty to observe all the terms and conditions of coverage, which, in our example, includes not allowing an unlicensed driver to drive. Failure to do so exposes the intermediary to a recovery claim by MPI under subsection 26(2)(b) of the Act which allows MPI to recover from persons not entitled to the benefit of subsection 38(4) [persons having the care, custody, or control of the vehicle who fail to observe and perform all the terms and conditions of coverage]. A statement from an intermediary is always required when there is a coverage problem. The statement should be framed as if the intermediary was the registrant/insured, covering consent and knowledge surrounding the driver’s




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breach. As indicated, a common example is a parent allowing their son or daughter to drive their car who later allows an unlicenced or impaired friend to drive. If the investigation reveals the intermediary did not take reasonable steps to ensure the driver was valid or sober, a certified demand letter should be mailed to the intermediary outlining how and why we have a right of recovery. Appendix c contains a

sample Intermediary Demand letter.




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K. Useful Tips on Taking Statements

1. Getting Full Particulars to Identify the Person.

When taking statements, the first order of importance is identifying the person making the statement. Make sure you obtain the person’s date of birth, occupation, employer, and any new addresses or phone numbers not on file. On some claims, parties are somewhat transient making it difficult for Special Account Services to locate. If you recognize the person moves around a lot, obtain a close relative’s name, address and phone number if possible. This may be the first and only time the person co-operates with MPI.

2. Unable to Obtain a Statement.

If a person refuses to respond to your requests for a statement, ensure you attempt contact by both phone and letter to all known addresses and phone numbers before denying without a statement. If a statement is not possible, a police report or a third party statement is acceptable once the breach is confirmed. Checking previous claims and the A/R inquiry is also a good resource to obtain particulars. You can also ask the Special Account Services Skip Tracer to assist in locating or contacting the person we need a statement from. Send a request by e-mail to a Special Account Services Supervisor.




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L. Pedestrians and Cyclists When a pedestrian or cyclist causes damage to an insured’s vehicle, Manitoba Public Insurance is subrogated to our insured’s right of recovery against the pedestrian or cyclist. This can create a contentious situation when the pedestrian or cyclist we intend to recover from was injured and is receiving PIPP benefits. This means that while we are paying benefits to the person, we are also seeking to recover from them. Pedestrians and cyclists are not insured with MPI for third party liability coverage. They may have insurance coverage under their homeowners or tenant’s insurance policies. Should the pedestrian or cyclist not carry third party liability insurance, they are then personally liable for the damages they caused to our insured’s vehicle, provided they are legally liable. In these cases, a thorough investigation is required and conducted by the physical damage adjuster. This includes: - Statement and diagram from the vehicle driver - Statement and diagram from the pedestrian or cyclist - Witness statements - Police reports - Photos of vehicle or bicycle damage, if applicable - Labeled photos of the accident scene and corresponding diagram The importance of a thorough investigation is underscored by Section 153(1) of The Highway Traffic Act which applies to collisions involving pedestrians/cyclists and motor vehicles. This section operates to place the onus of disproving negligence on our insured driver. This means that for our recovery claim to succeed, we must be in a position from which we can positively prove that our insured driver did not cause the collision, or at least, was not the sole cause of the collision. Special Account Services can only make this determination after a full and thorough investigation. The following Claims Memorandum sets out more fully the requirements for pursuing subrogation against a pedestrian or a cyclist. Note that physical damage adjusters are not to contact the pedestrian or cyclist regarding potential subrogation.




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INTER-DEPARTMENTAL MEMORANDUM

DATE: May 3, 2002 TO: All Claims Branch Managers FROM: Director, Claims Operations RE: Subrogation from Pedestrians & Cyclists

As outlined in memo of March 11, 1996, with the advent of PIPP, the Physical Damage Adjuster became responsible for deciding liability on claims with one or more associated injuries, except those involving: • certain Criminal Code convictions, as outlined in Sec. 161(1) of the

Act, such as impaired driving, criminal negligence causing death, refusing to provide a sample, etc.;

• non-residents; • unidentified motorists; or • subrogation The ‘reverse-onus’ provisions of Section 153(1) of the Highway Traffic Act place the onus of proof on the motorist in cases of collision with pedestrians or cyclists: 153(1) Where loss or damage is sustained by any person by reason of a motor vehicle upon a highway the onus of proof that the loss or damage did not arise entirely or solely through the negligence or improper conduct of the owner or driver is upon the owner or driver. For this reason, Physical Damage Adjusters were to avoid raising expectations on the part of motorists of possible recovery against pedestrians or cyclists. However, in cases where our investigation indicated a strong likelihood of potential recovery against a pedestrian or cyclist, we had instructed the




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field to advise the pedestrian/cyclist that they may receive a demand letter for the vehicle damage. This was to be done by the Injury Case Manager where an injury claim had been presented by the pedestrian or cyclist, and by the Physical Damage Adjuster in all other cases. Special Accounts would be responsible for having the final say over whether or not to pursue recovery, following referral of the matter to them in the usual manner. Recently, a pedestrian who suffered serious injuries in a car/pedestrian accident received a demand letter from the Physical Damage Adjuster for $2,385 in vehicle damage, causing her considerable anxiety. To prevent such situations from recurring, in all cases of potential subrogation of vehicle damage costs against pedestrians or cyclists, the Physical Damage Adjuster will: • complete our liability investigation thoroughly and promptly. This would include securing statements from our driver and any witnesses, the pedestrian/cyclist (if no injury claim presented), a copy of the police report, photos of any vehicle damage, and a diagram and photos of the accident scene. (In cases where an injury claim is presented by the pedestrian/cyclist, the Injury Case Manager will be responsible for securing a statement from the injured pedestrian/cyclist). • explain the concept of ‘reverse onus’ when taking statements from motorists involved in collisions with pedestrians or cyclists; • in cases where our investigation indicates the probability of successful subrogation against the pedestrian/cyclist, refer the file to Special Accounts, who will review all available information, decide whether or not to pursue recovery, and, if recovery is pursued, change the role description of the pedestrian/cyclist in CARS to ‘subrogee.’ Under no circumstances will the Physical Damage Adjuster contact the pedestrian/cyclist about potential subrogation. Any such contact will originate from Special Accounts, who will also notify the vehicle owner in cases where it is deemed that recovery efforts against the pedestrian/cyclist are not feasible.




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Please ensure that your staff are aware of the preceding. Questions or comments may be directed to at . (Note: currently at the same extension.) ______________ Director, Claims Operations




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NOTICE: THE ADVICE CONTAINED HEREIN IS BETWEEN SOLICITOR AND CLIENT, IS SUBJECT TO PRIVILEGE AND RESTRICTED TO THE FACTS AS PRESENTED. THIS DOCUMENT IS CONFIDENTIAL AND MUST NOT BE CIRCULATED OUTSIDE THE MANITOBA PUBLIC INSURANCE CORPORATION NOR PASTED IN CARS WITHOUT THE PRIOR APPROVAL OF THE AUTHOR. DATE: Adopted October 2003 FROM: Litigation Counsel to SAS RE: Residency Breaches involving a Right to Recover _____________________________________________________________ PURPOSE: The purpose of this procedure is to facilitate the early involvement of SAS in out-of-province claims where (1) there is a breach of coverage and (2) we allege a right to recover from our insured. The objective of this procedure is to complete the whole file expeditiously by having claims and SAS work cooperatively. SUMMARY: Since both the coverage and the recovery issue are two sides of the same allegation coin, it is sensible to have both claims and SAS agree on the sufficiency of evidence to support the allegation. Having agreed, a no coverage/recovery right letter will be sent to the insured under the signature of the claims designate. The letter will include the name of the SAS designate, who will be responsible for maintaining contact with the insured as well as handling recovery issues as they arise. In addition to the obvious benefit of bringing both claims and SAS resources together to handle their respective areas of expertise, this procedure also provides the opportunity to conclude both the claims and recovery portions of the file contemporaneously, thus expediting the recovery of debt and allowing for quicker resolution of any coverage disputes. PROCEDURE: The following outlines the procedure that will be followed in situations where MPI may not cover an insured involved in an at-fault out-of-province accident. 1. Our insured reports the out-of-province accident. 2. An investigation confirms our insured has no coverage, or has breached coverage, giving rise to a recovery situation. In addition to a Non-Waiver Agreement, the investigation will include a statement from our insured on both the liability for the accident issues as well as the no coverage/breach issues.




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3. SAS will review and agree with the no coverage decision prior to claims sending to the insured a denial letter. 4. In addition to advising the insured of the denial of coverage for the loss, and the grounds, the denial letter will also now include a paragraph advising of MPI’s right to seek recovery from the insured and provide the name of the SAS contact. 5. From this stage claims will continue to handle the claim file and attempt to negotiate settlement with the plaintiff(s). SAS will handle all recovery issues and attempt to settle with the insured. 6. Where the plaintiff(s) are willing to settle without a lawyer, claims will contact SAS with particulars of the proposal. SAS will then contact the insured to ask whether the insured will accept that amount as a debt to be repaid to MPI and sign documents securing the debt. The insured will be advised that the effect of not accepting the proposal now will be an increase in the debt alleged to be recoverable by MPI from the insured. 7. If the proposal is accepted by the insured who signs the securing documents, then claims will proceed to settle as proposed, obtaining a Release naming both MPIC and the insured. 8. If the proposal is not accepted by the insured, the insured will be asked to provide the grounds for objecting. 9. If the grounds are not liability related, but only coverage related, then we can settle with the plaintiff(s), make a 30-day demand on the insured, and then proceed to file a statement of claim in Manitoba against the insured to litigate the coverage issue. 10. If the grounds are liability related, and the plaintiff(s) disagree, then they will need to file and serve on the insured a statement of claim. The plaintiff(s) should also provide the statement of claim to MPIC claims and SAS along with a copy of the Affidavit of Service on the insured. SAS will then serve the insured in accordance with section 36 of the Act and determine the insured’s intention with respect to defending the liability claim. 11. Whether or not the insured decides to file a statement of defence, if the disagreement with the plaintiff(s) persists, then claims will retain counsel to file a Third Party defence, which may or may not be based on the information provided by our insured. 12. If the insured does not file a statement of defence and is noted in default, and a settlement is reached, then in exchange for our settlement funds claims will




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request the plaintiff(s) obtain a default judgment against the insured and assign it to The Manitoba Public Insurance Corporation. 13. Claims will forward to SAS originals of the judgment and assignment. 14. SAS will then make a 30-day demand on the insured and, thereafter, depending on the insured’s response, either proceed to enforce the assigned judgment or proceed to litigate the coverage issue. 15. Throughout this procedure claims and SAS will work as a team and try to conclude the complete file expeditiously. Each will maintain a file and exchange copies of all letters and pleadings. Out-of-house counsel will be advised to provide copies of letters and pleadings to both claims and SAS.




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NOTICE: THE ADVICE CONTAINED HEREIN IS BETWEEN SOLICITOR AND CLIENT, IS SUBJECT TO PRIVILEGE AND RESTRICTED TO THE FACTS AS PRESENTED. THIS DOCUMENT IS CONFIDENTIAL AND MUST NOT BE CIRCULATED OUTSIDE THE MANITOBA PUBLIC INSURANCE CORPORATION NOR PASTED IN CARS WITHOUT THE PRIOR APPROVAL OF THE AUTHOR. DATE: September 24th, 2004 TO: Manager, Special Account Services FROM: Head, Recovery Legal Services RE: Procedure Concerning the Management of Claims Involving Recovery from Drunk Drivers _____________________________________________________________ PURPOSE: The purpose of this procedure is to enhance the strategic handling of claims concerning recovery from drunk drivers. SUMMARY: In Manitoba drunk drivers receive insurance coverage for damage they cause to others, but do not receive coverage for the damage they cause to their own vehicle. Of all the claims involving drunk drivers there are two streams. One stream involves drunks driving their own vehicle and the question to be resolved there is whether or not there is sufficient evidence to deny coverage to the drunk driver/owner under section 56(1)(a) of Part III. That decision (to deny the first party claim) has no recovery consequences and so is properly left to the claim centre staff. The other stream involves a drunk driving another person’s vehicle. In those cases it is not a question of denying the insured’s claim (which has been paid), but rather whether or not there exists sufficient evidence giving rise to a right of recovery against the drunk driver/non-insured under section 26(2)(a)(v) of that MPIC Act. Under this stream the question of sufficiency of evidence still exists, but since the decision solely concerns whether SAS will pursue recovery the decision is properly SAS’s to make. This procedure concerns the second stream. Claims will pay the first party claim and conduct an investigation into the circumstances of drinking and driving in accordance with an SAS checklist and, once complete, send the file to SAS to decide and handle the recovery issue.




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This procedure should improve both recovery and litigation management. Recovery is enhanced because:

• Effective recovery is time sensitive. Since SAS makes the decision to recover, SAS can determine when it is best to send the decision and make contact with the debtor. This provides the strategic advantage to SAS, not the debtor.

• Earlier contact with the debtor provides better leverage to SAS and exposes

more of the debtor’s assets (before debtor goes bankrupt or transfers property).

• With files in SAS sooner, this provides to SAS a more accurate reflection of

the extent of the workload, and allows for more effective allocation of resources.

• We reduce our reliance on an increasingly unpredictable, overburdened and

prolonged criminal justice system. Litigation management is enhanced because:

• We apply consistent and effective litigation standards to investigations through the use of

1. checklists 2. scripted statements 3. training sessions.

• We allow for the early deployment of litigation standards to files likely

destined to litigation. Usually, risk of litigation decreases as thoroughness of investigation increases.

• Early file review and advice by the recovery legal services team is

encouraged. • We provide a convenient “helpline” to frontline adjusters for particular

questions that may arise during their conduct of the claim file. This procedure is not meant to “harden” the division between Claims handling and SAS handling, but rather, to the contrary, establish a cooperative Claims/SAS handling of these files. We increase file handling effectiveness when we align our skills to the appropriate task during the course of managing the file.

Moreover, a collateral benefit of this arrangement will be enhanced Claims’ handling of files in the other stream where Claims decides on first party coverage. This is because the sufficiency of evidence to support both a denial and a recovery allegation will be similar.




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PROCEDURE: The following outlines the procedure that will be followed in situations where:

• the driver had been drinking, and • the first party claim will be paid, setting up possible recovery from the driver.

1. A claim is opened in which the driver/non-insured had been drinking. 2. The vehicle damage claim is concluded in the normal fashion. 3. An investigation into the driver’s drinking and driving abilities will be conducted by the Claim’s adjuster in accordance with the SAS checklist and advice sought from the recovery legal services team. To preserve litigation privilege, all material obtained from the investigation will form part of a separate file with the checklist affixed to the top. 4. Having concluded both the first party claim and the investigation in accordance with the checklist, the complete Claims file is referred to SAS for further handling. 5. SAS will review the file and decide whether a right of recovery exists. 6. Where no recovery right exists, the file will be closed. 7. Where a recovery right exists, SAS will send a right of recovery letter to the debtor demanding repayment within 30 days, the failing of which legal proceedings will be commenced. 8. Where the driver has been charged, and he or she intends to dispute those charges, SAS will monitor the outcome of that process. END




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RECOVERY LEGAL SERVICES Recovery From Impaired Drivers

CHECKLIST SPECIAL ACCOUNT SERVICES

The contents of this file were obtained in contemplation of litigation and are subject to litigation privilege and are not to be disclosed. DATE OPENED: This checklist is to be used where you believe MPI may have a right to recover Part III payments from a driver pursuant to s. 26(1)(v) of the MPIC Act for driving while intoxicated to such an extent as to be incapable of the proper control of the vehicle. A. Intoxicated? What evidence do you have on file to support an allegation that the driver was under the influence of alcohol or drugs? 1) Breathalyzer reading? 2) Blood sample reading? 3) Hospital/medical records? 4) Driver statement? 5) Passenger statement(s)? 6) Ambulance personnel statements? 7) Police statements? 8) Other? B. Incapacity? What evidence do you have on file to support an allegation that the driver was incapable of the proper control of the vehicle because of the alcohol or drugs? 1) Witness statement(s)? [as above] 2) Inference from: (a) level of intoxication (b) how accident happened (i) accident scene photos (ii) accident scene diagram/investigation 3) Other? C. Charges? (1) Yes. (a) What charges? (b) Present status? (2) No. Why? D. Final comments including last contact with driver. __________________________ ___________________________ Adjuster name Supervisor name




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MEMO SPECIAL ACCOUNT SERVICES

DATE: March 30, 2005 FROM: Barrister & Solicitor Head, Recovery Legal Services Manager, Special Account Services RE: Recovery from Impaired Non-Owner Drivers __________________________________________________ A stumbling block for adjusters handling recovery from impaired non-owner drivers can be an inablity to gather the necessary information to adjust the claim. This information is also needed in order to forward the file to Speical Account Services for recovery. To address this concern, the attached Authorization has been drafted to be signed by the driver, enabling Manitoba Public Insurance to gather information relevant to the accident circumstances and, in particlar, records concerning intoxication. The authorization would be signed when the adjuster meets the driver for a statement. Failure to sign the authorization (or, for that matter, provide a full statement) would be a failure to cooperate and would result in a right of recovery (or denial of coverage for the impaired driver/owner).




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AUTHORIZATION FOR THE RELEASE OF INFORMATION

CLAIM NUMBER: _________________

TO:

WHOM IT MAY CONCERN.

I, ______________________________________ was the driver of a motor vehicle involved in an accident on ________________ at or near _____________________ . A claim to Manitoba Public Insurance (MPI) has been made for coverage under The Manitoba Public Insurance Corporation Act.

1. I authorize MPI to collect information concerning my ability to drive at the time of this accident including, but not limited to, hospital and ambulance records, law enforcement records relating to the accident investigation and the level of alcohol in my blood, and any statements I have made, to be used for the purpose of determining coverage and entitlements under the Act and Parts 3, 4 and 5 of Manitoba Regulation 289/88R to the Act.

2. I authorize you to provide MPI copies of any of the information in your

possession as set out in paragraph 1.

3. This authorization, or a photocopy of same, shall be your full and sufficient authority to disclose this information to MPI.

4. This authorization shall be valid for a period of two years from the date of

my signature, unless earlier revoked by me in writing. _____________________________ ____________________________________ Witness Signature ____________________________________ Date




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Letter to Intermediary

CERTIFIED #

Dear Sir/Madam: RE: Claim Number: Date of Loss: Our investigation of this claim shows that at the time of the accident you allowed (owner’s name) vehicle to be driven by a person who was not qualified/authorized by law to operate a motor vehicle/ was impaired or was otherwise in breach of their insurance.

He/she was not authorized by law to operate a motor vehicle because a) He/she did not hold a valid Manitoba driver’s licence.

b) He/she was not wearing corrective lenses as required on his/her driver’s licence.

c) He/she was operating the vehicle after dark while his/her driver’s licence specifies daytime use only.

d) He/she did not meet the requirements of his/her beginner’s permit. It requires him/her to be accompanied by a licensed driver who holds a class of licence authorizing him/her to operate the class of motor vehicle being driven. This person must have at least two years driving experience and must occupy a seat beside the driver.

He/she was not qualified to operate a motor vehicle because

a) He/she has not taken a driver’s test.

b) He/she has, since the date of the accident, taken a driver’s test but was unsuccessful.

c) He/she is ineligible to take a driver’s test.

d) The results of his/her eye test indicates that he/she cannot operate a motor vehicle without corrective lenses (or after dark).




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e) He/she was impaired.

As assignee and subrogee of the rights of recovery of our insureds, The Manitoba Public Insurance Corporation Act entitles Manitoba Public Insurance to recover from your driver all the losses sustained in this accident as a result of driving (put in condition listed above). The Act also entitles Manitoba Public Insurance to recover from you for allowing your driver to drive (put in condition listed above). As such, you are personally responsible to reimburse Manitoba Public Insurance for all damages suffered under this claim. Please be advised that we have now concluded all claims related to this loss for the sum of $12,816.00 and hereby demand from you immediate payment of same. Upon receipt of this letter please contact the writer at Telephone Number to arrange for suitable repayment of the above amount. Should a suitable arrangement for repayment not be made this matter will be referred to our Special Account Services Department in order to enforce our rights of recovery in accordance with subsection 26(6)(a) of the Act, which says

26(6) For the purposes of enforcing the rights of recovery to which the corporation is subrogated and of which it is deemed to be an assignee under subsection (1) the corporation may (a) bring a separate action in its own name to recover from the person liable in respect of loss, damage, injury, or death the amount of benefits and insurance money that it has paid or for which it has assumed liability;

This letter should not be construed as a waiver of any additional grounds of recovery available to Manitoba Public Insurance. Please give this matter the serious attention it deserves. Yours Truly,


1

SUBROBOOT CAMP

AGENDA

1. What is “subrogation”?

2. What is our subrogation?

3. What is others subrogation?

4. Specific subrogation issues …

2

August 4, 2010 MBA (MPI) 1-26 (e) Attachment

2

WHAT IS SUBROGATION?

1. Definition

2. Principle of Indemnity

3. Castellain v. Preston

4. Lord Napier v. Kershaw

5. Implications

3

Definition

“Subrogation” is the substitution of one party’s rights for another In insurance law it involvesrights for another. In insurance law it involves the transfer of the rights of the insured to the insurer after the insurer has indemnified the insured for the loss. The insurer is commonly referred to as “standing in the shoes” of the insured and as such any subrogated action by

4

y g ythe insurer is subject to the same defencesthat would have been available against the insured.


3

Purpose of Subrogation

Subrogation serves two main purposes1. To preserve the principle of Indemnity

2. To preserve the principle of Responsibility

Somersall v. Friedman (2002, SCC)

5

Principle of Responsibility

• Subrogation ensures that the loss falls on the person who is legally responsible for causing itperson who is legally responsible for causing it.

• Without subrogation, an insured could recover the full value of the loss from the insurer, leaving the insured with no incentive then to pursue the third party who caused the loss.

• Subrogation allows the insurer to assume the

6

• Subrogation allows the insurer to assume the insured’s rights of recovery from the third party, thus maintaining proper loss allocation.


4

PRINCIPLE OF INDEMNITY

• An insured receives no more and no less th f ll i d itthan a full indemnity

• Subrogation ensures that while an insured is fully compensated, he does not profit from the loss

• Double recovery induces “the moral risk

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• Double recovery induces the moral risk of dishonesty by the insured”

Principle of Indemnity

• The doctrine of subrogation is the hand maiden of the principle of indemnityof the principle of indemnity

• Every contract of indemnity is presumed to provide the insurer the right of subrogation whether it is expressed or not

• Conversely, subrogation is presumed not to apply to a non indemnity contract

8

apply to a non-indemnity contract


5


• An indemnity insurance contract is one by hi h th i t twhich the insurer agrees to compensate

the insured for the pecuniary value of the insured loss, up to the limits of the policy.

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“An insurance policy to cover an actual provable loss against a specified risk is a contract ofloss against a specified risk is a contract of indemnity which rests on the well known principle of law that where one person has agreed to indemnify another, he will, on making the indemnity, be entitled to succeed to all the ways and means by which the person

10

y y pindemnified might have protected himself against or reimbursed himself for the loss.”

Somersall v. Friedman, per Binnie J.


6

Castellain v. Preston

• While the doctrine of subrogation is as old as Roman Law, this case is the “modern” legal statement of theLaw, this case is the modern legal statement of the doctrine.

• This case explained subrogation and held that it permitted an insurance company to recover the insurance monies it had paid out to the insured under a fire insurance policy where the insured also recovered the full value of the insured property from a third party

11

the full value of the insured property from a third party under the terms of a purchase agreement.


• “The very foundation of every rule which has been applied to insurance law is this namelybeen applied to insurance law is this, namely, that the contract of insurance contained in a marine or fire policy is a contract of indemnity, and of indemnity only, and that this contract means that the assured, in case of a loss against which the policy has been made, shall

12

g p y ,be fully indemnified, but shall never be more than fully indemnified.”

per Brett L.J.


7


• “The doctrine of subrogation does not arise upon any of the terms of the contract of insurance; it isany of the terms of the contract of insurance; it is only another proposition which has been adopted for the purpose of carrying out the fundamental rule which I have mentioned, and it is a doctrine in favour of the underwriters or insurers in order to prevent the assured from

13

precovering more than a full indemnity; it has been adopted solely for that reason.”

per Brett L.J.


• “The policy is really a contract to indemnify the person insured for the loss In order toperson insured for the loss … In order to ascertain what that loss is, everything must be taken into account which is received by and comes to the hand of the assured, and which diminishes that loss. It is only the amount of the loss … which is to be paid after taking into account and estimating those benefits or sums

14

account and estimating those benefits or sums of money which the assured may have received in diminution of the loss.”

per Cotton L.J.


8


• “The general rule of law (and it is obvious justice) is that where there is a contract of indemnity and a losswhere there is a contract of indemnity and a loss happens, anything which reduces or diminishes that loss reduces or diminishes the amount which the indemnifier is bound to pay; and if the indemnifier has already paid it, then, if anything which diminishes the loss comes into the hands of the person to whom he has paid it, it becomes an equity that the person who has already paid

15

the full indemnity is entitled to be recouped by having that amount back.”

Per Cotton L.J. quoting Lord Blackburn

Castellain v. Preston: take away

• Indemnity is the fundamental principle of i d th d t i f b tiinsurance and the doctrine of subrogation assures full indemnity, but no more than full indemnity.

16


9

Lord Napier v. Kershaw

• 1993 House of Lords Decision on the t f b tinature of subrogation

• Prior to this case there was conflicting opinions on whether subrogation was a common law doctrine arising as an implied term in a contract of insurance or an equitable doctrine.

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• Subrogation is an equitable doctrine arising out of the very nature of a contract of insuranceof the very nature of a contract of insurance

• Subrogation rests upon the ground that the insurer’s contract is in the nature of a contract of indemnity and that he is therefore entitled, upon paying a sum for which others are primarily liable to the insured to be proportionately

18

liable to the insured, to be proportionately subrogated to the right of action of the insured against them.


10


• As an equitable doctrine, subrogation id th t th i hprovides that the insurer has an

enforceable equitable interest in the damages awarded against the liable third party.

19


“In order to protect the rights of the insurer d th d t i f b ti itunder the doctrine of subrogation equity

considers that the damages payable by the wrongdoer to the insured person are subject to an equitable lien or charge in favour of the insurer.”

20

per Lord Templeton


11


• An enforceable equitable interest means– Insured is guilty of unconscionable conduct if

he does not provide for the insurer to be recouped out of the damage award.

– Equity will not allow the insured to insist on his legal rights to all the damages and will

t i hi f d li ith th d

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restrain him from dealing with those damages so far as they are required to recoup the insurer under the doctrine of subrogation.

Lord Napier v. Kershaw: take away

• Subrogation is an equitable doctrine in t f th i i l f i d itsupport of the principle of indemnity

• Equity enforces rights of subrogation because an insurer has a proprietary interest in the damages recovered by the insured

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insured


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Implications

1. The insurer’s right of subrogation does t i til th i d h i dnot arise until the insured has received

full indemnity.

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Implications

2. In a subrogated action the insurer can be i b tt iti th th i d Iin no better position than the insured. In other words, an insurer’s right to subrogation is entirely derivative.

– Must file in name of insured

– Subject to same defences

24

j


13

Implications

3. An insurer cannot subrogate against its i down insured.

– Right is derivative

– “Can’t sue yourself”

25

Implications

4. The insured has a duty to cooperate with i t th i i d ior assist the insurer in advancing a

subrogated claim.– Good faith obligation

– Must permit use of name in pleading

– Must provide and secure evidence

26

p


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Implications

5. The insured has a duty not to prejudice th i ’ itithe insurer’s position.

– Good faith obligation

– Renders insured liable to insurer for the value of the right disposed

27

Implications

6. Somersall v. Friedman (2002, SCC)

– Where theory is trumped by deep pockets

28


15

WHAT IS OUR SUBROGATION?

1. General

2. Section 26• MPIC v. Sam’s Enterprises

• MPIC v. Lupyrypa

3. Section 40

4 S ti 39

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4. Section 39

GENERAL

• Section 26 provides rights of subrogation upon payment of our insured’s first party claimupon payment of our insured s first party claim.

• Section 39 provides rights of subrogation upon payment to any person for damage or injury caused by an uninsured motor vehicle.

• Section 40 provides rights of recovery against our insured in breach upon payment to third

30

our insured in breach upon payment to third party.


16

SECTION 26

• The general subrogation provision that applies to the recovery of first party coverage (old)to the recovery of first party coverage - (old) Part II and Part III payments – where the loss was caused or contributed to by the fault of a driver of a motor vehicle who falls within one or more of the circumstances listed.

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Subsection 26(1)

• Upon making any first party payment, or even upon assuming liability for such payment MPI isupon assuming liability for such payment, MPI is subrogated to and shall be deemed to be an assignee of all its insured’s rights of recovery against any liable person.

• This alters the rule that subrogation does not arise until and unless the insured is fully

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arise until and unless the insured is fully indemnified – MPIC v. Sam’s Enterprises.


17

MPIC v. Sam’s Enterprises

• “…these statutory provisions have the effect of changing the common law doctrine ofchanging the common law doctrine of subrogation which was that an insurer was not subrogated to the rights of his insured unless and until the insurer had paid the whole of the loss sustained by the insured. Under the statutory provisions the insurer is given a right of subrogation to the extent of the amount it has

33

subrogation to the extent of the amount it has paid even although the insured has not been paid the entire amount of his loss.”

per Jewers C.C.J.

Subsection 26(2)

• Sets out the persons against whom MPI may exercise the subrogation rights establishedexercise the subrogation rights established under sub-section 26(1).

• That person must have “caused or contributed” to the loss – MPIC v. Lupyrypa

34


18

MPIC v. Lupyrypa

• “The defendant under the circumstances pertaining in this matter would surely be liablepertaining in this matter would surely be liable to the owner of the vehicle for the damage done to the vehicle which he took without the owner’s consent, however, whether he is liable for the damage to the plaintiff by virtue of the provisions of [s.26] depends on the wording of that section which provides that he is liable only if the

35

which provides that he is liable only if the damage is caused or contributed to by the faultof the defendant.”

per Barkman C.C.J.

Subsection 26(2)(b)

• “a person who, at the material time, was driving or operating a motor vehicle or trailer without theor operating a motor vehicle or trailer without the consent, express or implied, of the owner thereof” (eg: auto thieves)

• “or who otherwise is not a person entitled to the benefit of subsection 38(4)” (eg: intermediaries)

36


19

Subsection 26(3)

• Provides that any person who falls within 26(2) is excluded from the application of the section 38is excluded from the application of the section 38 reduction of liability provisions.

• But for this subsection, an insured in breach would be able to have their liability reduced by the very amounts that MPI sought to recover in its subrogated action

37

its subrogated action.

Subsections 26(4)-(5)

• These act to make a vehicle owner “liable to the same extent as the person mentioned insame extent as the person mentioned in subsection (2)” if the vehicle owner is also in breach of coverage. Also applies to joyriders.

• For example, a subrogated action against an unlicensed driver under 26(2)(ii), and the owner for allowing this in breach of s 88 of Part IV

38

for allowing this in breach of s.88 of Part IV.


20

Subsection 26(6)

• Sets out how MPI may enforce the subrogation rightsrights.

• 26(6)(a) alters the rule that the insurer had to bring the subrogated action in the name of its insured and allows MPI to bring the subrogated action “in its own name”.

• 26(6)(b) allows for MPI to “join with any other

39

• 26(6)(b) allows for MPI to join with any other person … upon such terms as may be agreed to … one action in the name of that person for all damages … recoverable”.

Subsection 26(7)

• Applies where MPI brings action first• Where MPI brings its own action under 26(6)(a)• Where MPI brings its own action under 26(6)(a),

the insured may bring own action “for the damages recoverable by him; but he may recover only the amount by which the damages exceed” MPI’s subrogated amount.

• Compare with s.76(1) where PIPP claimant can b i ti t id M it b “ bj t t th

40

bring action outside Manitoba “subject to the corporation’s right of subrogation … for compensation in excess of the compensation received”.


21

Subsection 26(8)

• Applies where insured or another brings action firstaction first

• “The commencement of an action … by any person … shall not prejudice the right of the corporation to bring, at any time prior to judgment in that action … a separate action under clause 6(a) and subsection (7) applies to

41

under clause 6(a) and subsection (7) applies to such action.”

Subsection 26(9)

• Provides that the insured not act to the prejudice of MPI’s subrogation rightsprejudice of MPI s subrogation rights.

• Upon written notification, the insured cannot do anything concerning their claim “to the prejudice of the claim of the corporation”.

42


22

Subsection 26(9)

• Provides that the insured assist in securing MPI’s subrogation rightsMPI s subrogation rights.

• 26(9)(a) the insured “shall enter into such agreements and execute such documents as the corporation may reasonably request to further secure” its subrogation rights.

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Subsection 26(9)

• 26(9)(b) the insured shall not interfere in MPI’s action and “whenever requested shallaction and whenever requested … shall – aid in securing information and evidence

– the attendance of any witness

– cooperate in any action by MPI (except in a pecuniary way)

44


23

Section 26: take away

• Section 26 is our bread and butter section. Y ’t k i SAS ith t k iYou can’t work in SAS without knowing and understanding it.

45

SECTION 40

• Provides Rights to a Third Party suffering l b i d i b hloss by an insured in breach.

46


24

Subsection 40(1)

• Modifies common law privity of contract

All thi d t ith “ t t l• Allows a third party with “no contractual relationship” with MPI to nevertheless have claim against an insured in breach of Part IV satisfied by MPI.

47

Subsection 40(6)

• Provides a right to recover from our insured the amounts it has paid out to the third partyamounts it has paid out to the third party.

• Amounts “that it would not otherwise be liable to pay”…

• Must personally deliver or forward by registered mail to last known address a demand for reimbursement of amount paid to trigger

48

reimbursement of amount paid to trigger statutory right to be reimbursed.


25

Subsection 40(9)

• Where third party has obtained a judgment against our insured in breach MPI obtains anagainst our insured in breach, MPI obtains an assignment of the judgment and “unless within 30 days after demand for payment or reimbursement under subsection (6) has been made … the insured disputes, in writing … his liability to pay or reimburse” MPI is then entitled

49

y p yto file the assigned judgment.

SECTION 39

• While s.40 makes MPI liable to pay third t l i d i t i d iparty claims made against insureds in

breach, s.39 goes even further to make MPI liable to pay third party claims against uninsureds.

50


26

Subsection 39(4)

• “Where under a plan established under this Act or the regulations the corporation has paidor the regulations, the corporation has paid insurance moneys for the … loss … of a person, occasioned in Manitoba by an uninsured motor vehicle … the corporation is subrogated to the rights of the person …. And the corporation may maintain an action in its name … against any

51

g yother person liable…”

U.I.M.

• The “plan” is ss. 102- 105 in Regulation 290/88.• Division V of Part IV• Division V of Part IV • “DAMAGE BY UNINSURED VEHICLE”• Section 105 provides MPI with right of

subrogation when an “amount is paid by the corporation under section 104”.

• MPIC v. McCambridge (1985, QB) ruled that

52

MPIC v. McCambridge (1985, QB) ruled that MPI must comply exactly with the terms of s.104 or lose its rights of subrogation under section 105.


27

Subsection 39(8)

• Where MPI pays out money under this section, “notwithstanding the owner or driver has notnotwithstanding the owner or driver has not consented to the payment” the owner or driver “shall be liable to pay or reimburse the corporation the amount so paid” if MPI shows it either personally or by registered mail to the last known address delivered to them a demand for

53

reimbursement.

WHAT IS OTHERS SUBROGATION?

1. Manitoba Insurance Act

2. SGI

3. ICBC

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28

Insurance Act (Manitoba)

• Part VII of Act is Automobile Insurance

S ti 273 id b ti i ht t• Section 273 provides subrogation rights to an insurer “who makes payment or assumes liability therefor” and “may bring action in the name of the insured to enforce those rights”.

• Provides a pro-rating of the “net amount” recovered

55

recovered.

• The Insurance Act does not apply to MPI’s auto insurance.

Saskatchewan

• Section 80 of the Automobile Accident Insurance Act provides SGI similar subrogation rights asAct provides SGI similar subrogation rights as our section 26: “subrogated to and deemed to be an assignee”.

• Unlike MPI, provides for pro-rated division of net proceeds of recovered amounts.

56


29

British Columbia

• Section 84 of the Insurance (Vehicle) Act provides ICBC with its subrogation rightsprovides ICBC with its subrogation rights.

• ICBC is subrogated to and deemed to be an assignee.

• Provides for pro-rated division of net amount recovered.

Al t th i ti 93 1 hi h

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• Also noteworthy is section 93.1 which enumerates ICBC’s “collection remedies”

SPECIFIC SUBROGATION ISSUES

1. S. 40 Denial Letters• MPIC v. Brant

2. Set Off• Grace v. MPIC

3. Defences to SubrogationMPIC R W From

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• MPIC v. R.W. From

• MPIC v. Diggerness

• Fernandez v. Daet


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Section 40 Denial Letters

• Claim Centre letters containing a demand for reimbursement from an insured in breach forreimbursement from an insured in breach for amounts paid to repair the other insured vehicle they damaged.

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MPIC v. Brant (1991, CA)

• MPI’s right to recover from an insured in breach the amounts paid to repair the insured vehiclethe amounts paid to repair the insured vehicle they damaged is section 26.

• Where MPI pays out amounts under Part III and seeks to recover from the driver, the issue is not whether the driver has Part IV coverage, but rather whether the driver is a person who falls

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rather whether the driver is a person who falls within section 26.


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Set Off

• Grace v. MPIC, (1988, CA)• “Subrogation has its foundation in the law of• Subrogation has its foundation in the law of

equity. It would be inequitable to allow an insured person to be indemnified for a loss, first by his own insurer, and then a second time by a defendant tortfeasor.”

• “These provisions represent a statutory attempt t t h th it bl i i l th t

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to entrench the equitable principle that an insured should not receive double indemnity for a loss.”

per Huband J.A.

Defences to Subrogation

• MPIC v. R.W. From, (1981, Co. Ct.)

S b ti i d i ti i ht d th th• Subrogation is a derivative right, and thus the insurer is subject to the same defences available against the insured.

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• MPIC v. Diggerness & Wallace , (1995, CA)

A d f d t t MPI’ b t d l i t• A defendant to MPI’s subrogated claim cannot complain that MPI should not have paid the claim to which it is subrogated under a valid contract of insurance.

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• Fernandez v. Daet, (1987, QB)

Th d t i f b ti th t th t• The doctrine of subrogation that ensures that an insured does not double recover from a loss, also serves to ensure that a tortfeasor does not double pay for a loss.

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WRAP UP & QUESTIONS

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Documents

MBA (MPI) 1-26 RESPONSE€¦ · August 4, 2010 MBA (MPI) 1-26 Attachment A Call Centre Scripts Physical Damage Claims Subrogation A subrogation claim involves a negligent 3rd Party