Crown's Right of Recovery of Healthcare Costs from Motor Vehicle Accidents
What we examined
Background—The Crown’s Right of Recovery Act allows the government to recover healthcare costs that it incurs as a result of personal injuries suffered by Alberta residents1 due to the wrongful act or omission of a third party. This right of recovery includes injuries caused by motor vehicle accidents (MVA). Most of the recovery regarding motor vehicle accidents comes from an amount called the aggregate assessment,2 paid by automobile insurers. Each calendar year, the Minister of Health sets the aggregate assessment based on a cost estimate prepared by the Department of Health and other information received by the department. The department uses estimated healthcare costs because the calculation is done on an aggregate basis. To do this estimate, the department calculates the costs using primarily methodology from a dated Institute of Health Economics study.3 The Department of Treasury Board and Finance then collects the aggregate assessment from insurance companies.
The rest of the recovery from motor vehicle accidents comes from individual claims against parties causing motor vehicle accidents, where the wrongdoer does not have an insurer who contributed to the aggregate assessment. This includes claims where the wrongdoer’s insurer is from out of province. The government pursues those claims for healthcare costs it has incurred.
Objective of audit—To assess if the Department of Health has adequate processes to recover the government’s healthcare costs for motor vehicle accidents.
Scope of audit—We:
- tested a sample of individual claims for the 2012–2013 year
- tested the calculations of a sample of the cost estimates prepared to support the aggregateassessments up to and including the 2013 aggregate assessment
- reviewed other relevant documentation that the department used to support the aggregateassessment amounts
Why this is important to Albertans
As the Minister of Health said in 2009, the Crown’s Right of Recovery Act is important legislation because “Alberta taxpayers should not be responsible for healthcare costs resulting from wrongful acts or omissions.”
While the department believes it has achieved the appropriate balance, it may be setting the aggregate assessment too low or too high. The department also lacks a process to check whether the cost estimate calculation used in setting the aggregate assessment is a reasonable approximation of the Crown’s associated healthcare costs.