Early investigation is critical to establish a viable defence based on misrepresentation. In Kayretli and Personal – FSCO A12-003522, the insurer began investigating the possibility of misrepresentation on an accident benefit claim when it’s section 33 requests, seeking the Applicant’s pre-accident income work and details, were not answered. The Applicant had elected to receive caregiver benefits. In a statement to the insurer, the Applicant claimed that he was the primary caregiver to his six-month-old daughter, despite the fact that he also claimed that he was the sole owner, operator and employee of a restaurant where he worked from 9:00 a.m. to 9:00 p.m. every day. The Applicant also advised that his wife did not work and was home all day.
Due to the Applicant’s section 33 non-compliance, the insurer stopped paying benefits. The Applicant did not mediate the stoppage until a year later. At the FSCO mediation, the insurer raised the preliminary issue that the Applicant was not involved in an “accident” pursuant to subsection 2 (1) the SABS.
The Applicant argued estoppel and waiver in defence of the insurer’s position regarding preliminary issue. The Applicant relied on the fact that the insurer initially paid benefits to the Applicant and that the insurer did not raise the preliminary issue until over two years after the accident. Arbitrator Sapin rejected this argument and simply concluded that the insurer was entitled to raise the defence, and by doing so at mediation, it did so in a timely manner. Importantly, Arbitrator Sapin found nothing improper regarding how the insurer adjusted or investigated the claim. She also commented that the Applicant’s claim for benefits had been problematic from the beginning.
Arbitrator Sapin held that it is a “condition precedent” that every claimant must prove that they suffered an impairment as a result of an “accident” as defined in the SABS.
Arbitrator Sapin’s decision included fourteen pages of detailed evidentiary analysis from numerous sources: the ambulance call report, investigating police notes, the motor vehicle accident report, statements, oral evidence given by the Applicant’s friend who allegedly witnessed the accident, hospital records, and how the accident was reported the accident to medical assessors. The insurer also relied on a report from an engineer that provided photographs and measurements of key elements from the scene.
Arbitrator Sapin found that the Applicant did not suffer injuries as a result of an “accident” as defined by subsection 2 (1) the SABS. The Arbitrator concluded that the evidence relied upon by the Applicant was “unhelpful, incomplete, and unreliable.”
The Applicant remained mute throughout the entire benefit claim process and arbitration. Through his lawyer and his friend (who allegedly witnessed the accident), he argued that a rear-end collision between two vehicles in the curb lane had caused a vehicle to strike the Applicant – causing him to fall and strike his head on a concrete flower planter.
The investigating police officer’s notes concluded that there was no contact between the Applicant and the vehicle. The notes also cast doubt on the credibility of the Applicant’s friend, where the notes contained a different account of events from those he gave at the hearing.
The hospital records indicated that the Applicant had no bruises to his neck or head, despite his story that he struck his head and neck on concrete as a result of the accident. The Applicant demanded that his friend, who was there on the date of the accident, interpret for him at every medical appointment, statement and examination. The Applicant claimed not to be able to speak or understand English as a result of a head injury caused by the accident. The police notes, however, indicated that the Applicant was able to communicate his version of events directly to the officer at the hospital. The notes suggested that the Applicant spoke perfect English. The Applicant later claimed that he remembered nothing about the accident.
The insurer called one of the drivers of the vehicles involved in the collision. The driver’s evidence was that the Applicant’s friend spoke to her at the scene of the accident but that he did not tell her that she had hit the Applicant or that the Applicant had fallen. The driver of the vehicle did not see anyone standing close to the road or near the curb on the date of the accident. Arbitrator Sapin also considered inconsistent evidence from the Applicant’s friend, the driver of the vehicle, the ambulance call report and the police notes regarding the timing of the accident.
A treating neurologist interpreted a normal MRI of the Applicant’s head and opined that the Applicant needed to be admitted as an inpatient with the psychiatric unit. A second treating neurologist opined that the Applicant’s complaints were bizarre, inorganic and possibly linked to a psychiatric issue. A third neurologist offered a provisional diagnosis of conversion disorder (a psychiatric disorder) but also stated that the diagnosis of malingering needed to be ruled out.
The Applicant was subsequently declared to lack capacity by the Superior Court pursuant to the Substitute Decisions Act, 1992 (“SDA”).
At the arbitration hearing, the insurer claimed for repayment of benefits based on wilful misrepresentation by the Applicant. Arbitrator Sapin found that, pursuant to section 47 (4), there was no time limit for when an insurer may notify the insured person that benefits must be repaid.
Despite finding that the Applicant did not discharge his onus to prove, on a balance of probabilities, that he had been involved in an “accident,” Arbitrator Sapin did not order repayment of benefits to the insurer. She commented that, even though the Applicant had not met his onus to prove that he suffered his impairments as a result of an “accident, ” this did not necessarily mean that he obtained benefits from the insurer “as a result of wilful (i.e. intentional) misrepresentations.” Arbitrator Sapin focused on the fact that there was credible evidence to support that an accident had taken place between two vehicles and that the Applicant claimed to be unable to remember how he was injured on the date of the alleged loss.
This decision provides an almost exhaustive list of documentary and oral evidence to be measured when an insurer is investigating possible misrepresentation or fraud. The decision is helpful where it clarifies that there is no time limitation for an insurer to notify an insured person that benefits must be repaid. Of greater importance, perhaps, is the message that an insurer’s initial payment of a claim does not create an estoppel from later investigating and acting on its investigation of the legitimacy of the claim. There is certainly a high bar for insurers to meet in order to be successful in obtaining repayment of benefits based on wilful misrepresentation under the SABS. This bar becomes even higher, if not potentially impossible, when alleging wilful misrepresentation or fraud against an insured person who has been found to be incapable under the SDA. Where Arbitrator Sapin is now a Vice Chair at the LAT, it is arguably reasonable to expect a similar treatment of these issues at that new tribunal.