Neutral Citation: 2014 ONFSCDRS 10 FSCO A11-003906

BETWEEN:

ANDRAE SAMARU Applicant

and

SECURITY NATIONAL INSURANCE CO. / MONNEX INSURANCE MGMT. INC. Insurer

REASONS FOR DECISION

Before: Susan Sapin Heard: November 8, 2013, at the offices of the Financial Services Commission of Ontario in Toronto Appearances: No one appearing for Mr. Samaru Marlett Dobson for Security National Insurance Co./Monnex Insurance Mgmt. Inc.

Issues:

The Applicant, Andrae Samaru, claimed he was injured in a motor vehicle accident on November 12, 2009. He applied for and received statutory income replacement, medical and housekeeping benefits from Security National Insurance Co./Monnex Insurance Mgmt. Inc. (“Security National”), payable under the Schedule.¹ Security National suspended payments of all benefits after Mr. Samaru failed to attend an Examination Under Oath on April 29, 2010.

The parties were unable to resolve their disputes through mediation, and Mr. Samaru applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

In an amended Response to Mr. Samaru’s Application for Arbitration, Security National advised that it was seeking repayment of all benefits paid on the basis that Mr. Samaru was not involved in an accident.

The issues to be determined in this hearing are:

Should Mr. Samaru’s Application for Arbitration be dismissed on the basis that he has abandoned his action against Security National or this proceeding was commenced in bad faith?
Is Security National entitled to repayment of $24,242.01 paid out in benefits to Mr. Samaru under s. 47 of the Schedule because his injuries did not result from a motor vehicle accident as he claimed?²
Is Security National entitled to its expenses of this proceeding?

Result:

Mr. Samaru’s Application for Arbitration is dismissed on the grounds that it was commenced in bad faith and he has taken no steps to pursue this arbitration proceeding.
Security National is entitled to repayment of the benefits paid.

EVIDENCE AND ANALYSIS:

Background:

Mr. Samaru claimed he suffered WAD II soft tissue injuries to his neck and back and a full meniscus tear to his left knee in an accident alleged to have taken place on November 12, 2009.

The tear was surgically repaired in January, 2010. Security National paid Mr. Samaru's expenses for physical therapy and housekeeping. It also paid income replacement benefits until April 2010 on the basis that Mr. Samaru was unable to return to work as a telephone cable installer, a job he had held since 2007.

Security National became suspicious of Mr. Samaru’s claim and commissioned an assessment of the collision by Kodsi Engineering, a company that specializes in accident reconstruction. On January 25, 2010, Joseph Jakym, an engineer with Kodsi, examined the damage to Mr. Samaru’s vehicle and compared it with photographs of the damage to the other vehicle in the collision. In a report dated June 28, 2010, Mr. Jakym stated there was no evidence of contact between the vehicles.³

As part of its investigation into his claims, Security National attempted on several occasions to have Mr. Samaru submit to an Examination Under Oath, as it was entitled to do under s. 33 (1.1) of the Schedule. After Mr. Samaru did not attend the first examination scheduled for April 29, 2010, Security National suspended payment of all benefits until an EUO could be obtained. Mr. Samaru retained counsel and applied for mediation, and then arbitration of his claims. On March 6, 2011, Security National filed an amended Response to Mr. Samaru’s application for arbitration, advising of its position that Mr. Samaru was not involved in an accident within the meaning of s. 3 of the Schedule and that it required repayment of benefits it had paid under s. 47, on the basis of wilful misrepresentation or fraud.

At the pre-hearing which took place on July 31, 2012, the parties confirmed the issues in dispute for arbitration as follows:

Whether Mr. Samaru sustained an impairment as a result of an accident within the meaning of the Schedule;
Entitlement to ongoing weekly income replacement benefits (IRBs) of $372.06 from April 29, 2010;
Entitlement to medical benefits of $660.28 for driving anxiety treatment and $1,328.45 for psychotherapy;
Entitlement to three medical assessments by Century Diagnostic Assessment Centre totalling $5,014.58;
Entitlement to housekeeping and home maintenance expenses of $100 per week from April 29, 2010 up to 104 weeks after the accident;
Whether Security National was required to pay a special award.

Security National also advised at the pre-hearing that it was seeking repayment of all benefits paid to Mr. Samaru under s. 47(1)(a) of the Schedule which requires a person to repay to the insurer any benefit that was paid as a result of wilful misrepresentation or fraud.

At the pre-hearing, Mr. Samaru also agreed to submit to an EUO to take place on September 26, 2012. Security National agreed to provide him with the Kodsi report and all of its accident investigation material up to and including September 26, 2012, which it did.⁴

Mr. Samaru did not attend the EUO and his legal representative brought a motion under Rule 10 of the Dispute Resolution Practice Code to be removed from the record. On October 31, 2012, Mr. Samaru provided written consent to the removal of his legal representative together with a statement that he would either retain new counsel or represent himself in his arbitration proceeding.

Security National again served Mr. Samaru with notices by registered mail (and provided proof of service) to attend EUO’s scheduled for January 22, 2013, and May 16, 2013. Mr. Samaru did not attend either of these examinations.

Security National then requested a resumption of the pre-hearing, which took place via teleconference on September 6, 2013. The Commission sent Mr. Samaru a formal Notice of Resumption of Pre-Hearing Discussion. Despite this, I was unable to reach Mr. Samaru at the telephone number on file with the Commission. At the pre-hearing, Security National advised that it wished to have Mr. Samaru’s arbitration dismissed.

Accordingly, I scheduled a hearing to determine all issues in dispute between the parties for November 8, 2013 and advised Mr. Samaru that, at the hearing, I would be considering a dismissal of his claims on the grounds set out in Rule 68.

Mr. Samaru did not attend the hearing on November 8, 2013.

Security National personally served Mr. Samaru with the materials it intended to rely on at the hearing.⁵ I am satisfied that Mr. Samaru received proper notice of this hearing and that he was aware of the issues in dispute. I am further satisfied that Mr. Samaru has had proper notice of every formal step taken in this arbitration proceeding to date.

I did not receive any written submissions from Mr. Samaru or from anyone on his behalf.

Dismissal of the Arbitration Proceeding

As Mr. Samaru did not attend the hearing, it proceeded in his absence.

I find Mr. Samaru’s application for arbitration should be dismissed because it has been brought in bad faith. I find on the uncontradicted evidence before me that an accident did not take place on November 12, 2009 as Mr. Samaru claimed, and therefore his injuries could not have been caused by an accident within the meaning of s. 3 of the Schedule on that day, and Mr. Samaru claimed and obtained benefits from Security National to which he was not entitled.

This finding is based on the investigation and reconstruction of the accident by Kodsi Engineering, as described in its June 28, 2010 report. The engineers examined the damage on Mr. Samaru’s vehicle and compared it with photographs of the damage to the second vehicle that was said to be involved in the accident. Their report contains a detailed analysis of the damage and colour photographs. As noted above, they concluded there could not have been any contact between the two vehicles, and, furthermore, that the damage sustained by both vehicles was inconsistent with the reported sequence of events. The engineers also visited the site and analysed data downloaded from the Pontiac Sensing Diagnostic Module, a data recorder similar to the “black box” carried by aircraft, in Mr. Samaru’s vehicle. The information obtained from the data recorder also did not correspond to the sequence of events as reported. Inspection of paint marks and other damage to Mr. Samaru’s vehicle also suggested it had been involved in “at least five impacts” - but none of them with the other vehicle in the alleged “accident” of November 12, 2009.

Finally, based on the information obtained from the black box, the Kodsi engineers concluded, “It is . . . our opinion that the Pontiac’s [Mr. Samaru’s vehicle] front airbags were likely deployed in another vehicle or were manually pulled out to give the appearance that they had deployed.”

I find this evidence persuasive, and in the absence of any evidence to the contrary or any explanation forthcoming from Mr. Samaru, I draw an adverse inference from his failure to respond to the evidence against him by submitting to an EUO and by failing to pursue his claims or participate in this arbitration proceeding. On that basis, I find, on a balance of probabilities, that it is unlikely that Mr. Samaru was involved in accident as he claimed, and his claims against Security National and this arbitration proceeding are dismissed.

Alternatively, I would dismiss Mr. Samaru’s application for arbitration on the basis of my inherent jurisdiction to control the arbitration proceedings, which includes moving the matter forward expeditiously in a manner that is fair to both parties, and which may include issuing rulings and orders governing the participation of the parties throughout the proceedings, including the pre-hearing stage. In this case, I find Mr. Samaru has failed to participate in this arbitration proceeding, failed to comply with his undertakings, and failed to pursue his claims against Security National, to the extent that I deem him to have abandoned his proceeding.

Repayment of Benefits:

Security National paid Mr. Samaru a total of $25,242.01 in benefits, as follows:⁶

Medical and rehabilitation: $9,638.58 Costs of examinations: $4,786.06 Income replacement: $8,717.37 Housekeeping: $2,100.00

As noted, Security National requests repayment of these benefits under s. 47(1)(a) of the Schedule, which requires a person to repay benefits that were paid to the person as a result of wilful misrepresentation or fraud.

As noted, Security National advised Mr. Samaru of its intent to require repayment of the benefits paid to him on the basis that he was not involved in a motor vehicle accident in its amended response on March 6, 2011, in a letter to his legal representative on August 13, 2012⁷, and at the pre-hearing attended by Mr. Samaru on July 31, 2012.

Although the evidence submitted indicates Mr. Samaru suffered, at the very least, a knee injury that required surgery, the evidence indicates that this injury did not arise as a result of a motor vehicle accident on November 12, 2009, as Mr. Samaru claimed. I find he was not entitled to the benefits he claimed and received from Security National.

The only logical and reasonable conclusion to be drawn, is that Mr. Samaru misrepresented his circumstances to Security National, in which case the Schedule requires that he repay the benefits he received, together with interest.

EXPENSES:

Security National submitted a Bill of Costs for $6,842.68 incurred in legal fees; $1,063 for disbursements related to its efforts to serve Mr. Samaru with documents; and $1,477.67 for office disbursements, and made submissions regarding its claim for its expenses of this proceeding. I find the disbursements to be reasonable. Taking into account the maximum hourly rate of $100 payable for legal fees to counsel in Commission hearings and the one hour of attendance required for this motion, I find $5,000 for legal fees, inclusive of all taxes, is reasonable.

January 20, 2014

Susan Sapin Arbitrator

Financial Services Commission of Ontario