In M.D. and Intact Insurance, Adjudicator Deborah Neilson confirmed that fraudulently staged accidents were not “accidents” for purposes of section 3(1) of the Statutory Accident Benefits Schedule. Accordingly, claims for accident benefits arising out of such staged accidents are not properly payable by first party accident benefits insurers.

In this case, the claimant alleged to have been involved in an accident on March 13, 2014. The corresponding police report confirmed that he was the driver of a vehicle in a three-vehicle collision. Following this accident, the claimant submitted an application for accident benefits to his insurer, Intact, and subsequently received payment of income replacement benefits. However, shortly after commencing payment of these benefits, Intact proceeded to suspend these payments pending receipt of further relevant information. Intact subsequently denied further payment on grounds that the subject accident had been staged by the claimant. Furthermore, it argued that the claimant had made material misrepresentations in respect of his description of the accident in question.

The Law

Adjudicator Neilson relied on the Court of Appeal’s decision in Shakur v. Pilot in holding that the burden of proof fell on the claimant to show that he was in fact involved in an “accident” pursuant to section 3(1) of the SABS. Further, she referenced the Supreme Court of Canada’s decision in Amos and Insurance Corporation of British Columbia, in stating that the applicant had to prove – on a balance of probabilities – that the collision had resulted from the “ordinary and well-known activities to which automobiles are put”.

Notably, the claimant relied on Madinei and Ebadi and TD General Insurance Company, a FSCO decision in which Director’s Delegate Evans had determined that a staged collision was sufficient to meet the definition of an “accident” pursuant to the SABS. However, Adjudicator Neilson noted that she was not bound by this decision.

Adjudicator Neilson then considered the ramifications of section 118 of the Insurance Act. Section 118 essentially states that persons are not to profit under an insurance policy for that person’s intentional or criminal act. In finding that the purpose of staged collisions was for participants to profit from their insurance policies, Adjudicator Neilson held that the definition of “accident” under section 3(1) of the SABS was not inclusive of such staged collisions.

The Staged Accident

Intact relied on various evidence in respect of it’s allegation that the accident in question had been staged by the claimant. First, it noted that there were various inconsistencies in the claimant’s evidence with respect to the events leading up to the accident and the mechanism of the accident itself. In particular, it was noted that the claimant had contradicted himself on a number of occasions with respect to his familiarity with the area in which the accident took place. Further, he could not explain why he was travelling in the opposite direction of his intended destination at the time of his collision. Finally, he provided conflicting evidence with respect to whether or not he was stopped or moving at the time of subject impact.

Secondly, Intact obtained an accident reconstruction report which had indicated that the accident could not have occurred as the claimant had suggested. In particular, the claimant had stated that he had been the driver of the middle vehicle in a three vehicle rear-end accident. Further, he noted that his vehicle was impacted once by the vehicle behind him and once by the vehicle in front of him. However, contrary to this subjective evidence, the accident reconstruction report had concluded that the claimant’s vehicle either did not strike the vehicle ahead of it or had struck it no less than five times. Notably, this expert evidence was not contradicted by any expert evidence proffered by the claimant.  

Finally, Intact presented circumstantial investigative evidence which had suggested that the parties involved in the accident were previously acquainted and may have been active participants in other staged accidents. In particular, it was noted that there were a total of four other accidents which occurred within a 5 month span, all in the same geographic area, and all involving people of approximately the same age. Furthermore, there were social media links between the passengers and drivers of 3 out of the 5 accidents. The most notable social media link was between the passenger of the vehicle allegedly rear-ended by the claimant, who happened to be a Facebook friend of the driver of another vehicle involved in an accident a month later in exact same location as the claimant’s alleged collision.

Based on the foregoing evidence, Adjudicator Neilson stated that there was a strong possibility that the subject collision had been staged. As such, she noted that the applicant had failed to satisfy his onus of demonstrating that he had in fact been involved in an “accident” as defined by the SABS. Accordingly, she concluded that the claimant had failed to prove that he had been injured in an “accident” for purposes of his application for accident benefits.

Material Misrepresentation

Pursuant to section 53 of the SABS, Intact was entitled to stop paying accident benefits if it could prove that the claimant had wilfully misrepresented material facts with respect to his application for accident benefits.

Adjudicator Neilson cited Fisk and ING Insurance Company in holding that the burden fell on Intact to prove this allegation. In particular, it had to demonstrate that; (1) there was a misrepresentation made by the claimant, (2) that this misrepresentation was wilful and, (3) that what was misrepresented by the claimant was a material fact in respect of his application for accident benefits. Further, it was noted that Fisk stood for the proposition that a “willful misrepresentation” required an intentional or deliberate misrepresentation of fact.

Turning to the case at hand, Adjudicator Neilson determined that “regardless of what the applicant’s role was in the staging of the collision, his description of the collision and the circumstances leading up to it were made with the intent of misleading the respondent about what actually happened. This is a wilful misrepresentation”. Further, she found that this misrepresentation had been made for purposes of obtaining accident benefits from the insurer, and as such, was fundamental to the relationship between the claimant and his insurer. Accordingly, it was held that the misrepresentation was “material”, and as a result, Intact was entitled to terminate the payment of benefits in accordance with section 53 of the SABS.

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