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Treatment Financing as a Strategic Tool for Leveraging an Advance from a Defendant Insurer

Grace Tsang, BridgePoint Financial Services | May 23, 2014 | Posted in Commentary

Sloan Mandel, a partner at Thomson Rogers, specializing in serious personal injury and medical malpractice claims, recently secured a significant advance payment from an insurer for rehabilitation expenses using BridgePoint’s term sheet and treatment financing programme to strategically create exposure for the insurer for financing costs incurred as a direct result of denying his client’s request for an advance. For privacy reasons, certain details surrounding the claim cannot be disclosed.

An out of country plaintiff without access to OHIP coverage was involved in a motor vehicle accident that resulted in her becoming an incomplete quadriplegic. She incurred over $400,000 in hospital expenses with a requirement for significant ongoing expenses for treatment and care. The accident benefit insurer denied catastrophic impairment status and the tort insurer refused to make a voluntary without prejudice advance payment. The plaintiff’s family was not in a position to pay for treatment or obtain financing through traditional financial institutions. Therefore, Mr. Mandel contacted BridgePoint to determine if financial assistance could be provided.

BridgePoint agreed to provide a commitment to finance 100% of the expected cost of treatment through a general line of credit secured against the plaintiff’s claim where funds were to be transferred to counsel upon obtaining an invoice from the treatment provider. The plaintiff signed a loan agreement for $171,500 to fund on-going treatment and care with an agreement to provide additional funding if required, and BridgePoint provided counsel with a term sheet to confirm the funding commitment for the plaintiff. Mr. Mandel presented the term sheet to the insurer along with evidence supporting the requirement for ongoing treatment and care. The term sheet was also used to satisfy the treatment provider who continued to provide services with the understanding that funding was in place to pay for their services. Shortly thereafter, the insurer agreed to an advance in excess of the funding commitment provided by BridgePoint in the term sheet. BridgePoint is pleased to have assisted the plaintiff in her time of need and did not receive any compensation whatsoever for doing so.

This case study clearly demonstrates that an effective treatment financing strategy can be used by counsel to create exposure for an insurer where they have denied benefits, or an advance, where applicable. To maximize the potential for success it is necessary for counsel to develop a well- crafted claim for the recovery of interest that includes the following elements: (i) the claim for medical and rehabilitation expenses must be reasonable, necessary, and well documented; (ii) the insurer denies the claim or refuses to provide sufficient funds to accommodate the plaintiff’s needs; (iii) the plaintiff demonstrates a need for financial assistance and obtains an alternate source of financing to pay for the cost of treatment; (iv) the insurer is provided with notice of the financing commitment and is provided with a further opportunity to pay the benefit or provide the advance; and (v) a claim is made for the recovery of interest and other financing related charges as a special damage in the event the plaintiff is forced to finance treatment related expenses due to the insurer’s denial.

Please do not hesitate to contact Grace Tsang, Director of Legal Services at (647) 427-3922, should you require further information or wish to discuss this or our other services.

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