Changes to how LIANS is reimbursed the individual deductible for paid claims

Effective September 1, 2018, we are changing how we are reimbursed the individual deductible when we pay a claim.

Pursuant to a regulation it enacted in 2002, Council imposed a levy surcharge on lawyers who had paid claims in lieu of the deductible. On July 20, 2018, Council approved a new regulation – Regulation 12.6 – that will permit our change back to the deductible.

We have determined that for paid claims over the deductible, what we recover via the surcharge is actually less than the deductible established by the insurance policy. This presents a direct financial loss to LIANS, a loss that, ultimately, is borne by all practicing members. It is a loss that we seek to reduce if not eliminate.

We remain of the opinion that LIANS should continue to pay the deductible when it resolves a matter and be reimbursed by the insured lawyer. Furthermore, a payment plan, the same for everyone, should be available to those who want to pay the deductible by installment. We are also of the opinion that even with a payment plan, LIANS should be reimbursed a minimum amount when the claim is paid.

Accordingly, for claims paid on or after September 1, 2018, insured lawyers will have two payment options. You can choose to reimburse LIANS the deductible amount owing in full within 30 days of when we pay the claim[1] or you can enter into a payment plan on the following terms:

(a)    That portion of the Individual Deductible owing up to and including $2,000 shall be paid to LIANS within 30 days of the date the claim is paid;

(b)    The next $1,000 or part thereof remaining owing shall be repaid to LIANS on or before the next July 1 after the claim is paid;

(c)    The next $1,000 or part thereof remaining owing shall be repaid to LIANS on or before the next July 1 after the amount in (b) is paid; and

(d)    The next $1,000 or part thereof remaining owing shall be repaid to LIANS on or before the next July 1 after the amount is (c) is paid.

An important distinction between this payment plan and the current surcharge is that LIANS will administer this plan thus, subject to one caveat, the Society will not know that a lawyer had a paid claim. The caveat is that in the event of a default in repayment, LIANS can have the amount owing added as a surcharge to the Society’s next fee invoice with the outcomes that may have.

By not using the Society to collect the deductible, we are protecting your confidentiality. However, it is important that we preserve our ability to use a surcharge remedy, if necessary, as a way to collect the amount owing if there is a default.

Additionally, if you choose the payment plan, a default in payment will trigger interest at the rate of 5% per annum on the amount remaining owing and the terms of the payment plan expressly preserve LIANS’ contractual remedies to recover what remains owing.

If you are currently paying the surcharge, this change will not affect you, those payments continuing to their conclusion. However, you should know that the practice of waiving the surcharge if the lawyer paying it changes category has ended. This practice also results in a shortfall to LIANS that becomes a cost borne by the fee-paying membership at large. This also is not a cost the other members should be responsible for nor is it a loss we want to continue to sustain.

Should you have any questions, please feel free to contact Lawrence Rubin, LIANS’ Director of Insurance.

[1] If the total paid for the claim is less than the $5,000 deductible as set out in the policy, the amount actually paid on the claim will be the amount owing