Financial Services Commission of Ontario

Neutral Citation: 2014 ONFSCDRS 173

FSCO A11-001975, A11-001977, A11-001978 and A12-005066

BETWEEN:

ADEN ABDULKADIR, MARYAN OSMAN, MALYUN AHMED and ASLI MOHAMED Applicants

and

ECONOMICAL MUTUAL INSURANCE COMPANY Insurer

REASONS FOR DECISION

*Minor error on page 4 corrected on July 8, 2015, in accordance with the Dispute Resolution Practice Code and section 21.1 of the Statutory Powers Procedure Act.

Before: Robert Bujold

Heard: June 27, 2014, at the offices of the Financial Services Commission of Ontario in Toronto. Written submissions received by July 16, 2014.

Appearances: No one appeared for Mr. Abdulkadir, Ms. Osman, Ms. Ahmed or Ms. Mohamed Ian D. Kirby for Economical Mutual Insurance Company

Issues:

The Applicants claimed that they were injured in a motor vehicle accident on November 16, 2009. They applied for and received statutory accident benefits from Economical Mutual Insurance Company (“Economical”), payable under the Schedule.¹ Disputes arose regarding the payment of further benefits. Economical took the position that the accident was staged. In responding to the Applicants’ substantive claims, Economical put the Applicants to the strict proof that they had been involved in an “accident” pursuant to section 2 of the Schedule. Economical also sought repayment of benefits already paid on the basis of wilful misrepresentation or fraud pursuant to subsection 47(1)(a) of the Schedule.

The Applicants’ substantive claims were dismissed at prior hearings that they failed to attend.²

The issues in this hearing are:

1. Is Mr. Abdulkadir liable to repay benefits paid by Economical, pursuant to section 47 of the Schedule?
2. Is Ms. Osman liable to repay benefits paid by Economical, pursuant to section 47 of the Schedule?
3. Is Ms. Ahmed liable to repay benefits paid by Economical, pursuant to section 47 of the Schedule?
4. Is Ms. Mohamed liable to repay benefits paid by Economical, pursuant to section 47 of the Schedule?
5. Is any party liable to pay the expenses of the other in respect of the arbitration, pursuant to subsection 282(11) of the Insurance Act?

Result:

1. Mr. Abdulkadir shall repay to Economical the amount of $2,900.00 plus interest thereon at the rate of 1.3 percent per annum calculated from July 15, 2011.
2. Ms. Osman shall repay to Economical the amount of $2,157.16 plus interest thereon at the rate of 1.3 percent per annum calculated from July 15, 2011.
3. Ms. Ahmed shall repay to Economical the amount of $12,442.84 plus interest thereon at the rate of 1.3 percent per annum calculated from July 15, 2011.
4. Economical’s claim for repayment of benefits paid to Ms. Mohamed is dismissed.
5. Mr. Abdulkadir shall pay Economical’s expenses in the amount of $5,000.00 inclusive of fees, disbursements and H.S.T.
6. Ms. Osman shall pay Economical’s expenses in the amount of $5,000.00 inclusive of fees, disbursements and H.S.T.
7. Ms. Ahmed shall pay Economical’s expenses in the amount of $5,000.00 inclusive of fees, disbursements and H.S.T.
8. Ms. Mohamed shall pay Economical’s expenses in the amount of $2,500.00 inclusive of fees, disbursements and H.S.T.

ANALYSIS:

As with the proceedings that resulted in the dismissal of their substantive claims, the Applicants failed to attend this hearing into Economical’s claims for repayment.

Economical did not call any viva voce evidence in support of its claims for repayment. Economical relied on briefs filed as Exhibits. Specifically, Economical’s claims for repayment are founded primarily on an accident reconstruction report of Kodsi Engineering Incorporated (Kodsi) dated July 29, 2010, as well as addendum reports from Kodsi dated September 14, 2010 and June 27, 2011. Economical also filed and relied upon the Applicants’ Applications for Arbitration; transcribed statements of Mr. Abdulkadir, Ms. Osman and Ms. Ahmed (provided between March and May 2010); and, transcripts of examinations under oath of these same three Applicants (conducted between March and May 2011).³

Repayment provision

Economical claims repayment of benefits paid to the Applicants on the basis that benefits were paid to them as a result of wilful misrepresentation or fraud. Economical relies on subsection 47(1)(a) of the Schedule which provides:

47(1) A person shall repay to the insurer,

(a) any benefit under this Regulation that is paid to the person as a result of an error on the part of the insurer, the insured person or any other person, or as a result of wilful misrepresentation or fraud; [my emphasis]

Economical accepts that it bears the onus of proof in this case. Economical must therefore establish that any amounts to be repaid were “benefits,” that they were “paid to the person,” and that the benefits were paid “as a result of wilful misrepresentation or fraud.” I will address each of these requirements in turn, beginning with the last.

Were benefits paid “as a result of wilful misrepresentation or fraud”?

In brief, the Applicants claim that, on the evening of November 16, 2009, they were the occupants of a blue Plymouth Voyageur travelling eastbound on Rutherford Road in Vaughan when a silver Dodge Caravan that had been travelling northbound on Keele Street made a right turn into their path resulting in a collision.

At Economical’s request, Kodsi conducted an investigation into the collision. Specifically, Kodsi was asked “to examine the Plymouth and to compare and contrast its damage with respect to the reported sequence of events.”

In preparation of its first report of July 9, 2010, Kodsi reviewed statements given to Economical as well as the Self Reporting Collision Reports completed by Ms. Ahmed (who was driving the Plymouth) and the driver of the Dodge Caravan, Ms. Idman Said. Kodsi also examined the scene of the accident and the Plymouth.

Based on the information reviewed, Kodsi concluded that damage on the Plymouth did not correspond to striking the side of the Dodge. Specifically, there was bright orange and teal paint transfer marks observed on the Plymouth that did not match the silver colour of the Dodge. As well, the damage profile was inconsistent with the accident as reported. In that regard, Kodsi noted that there were sharp indentations to the front licence plate of the Plymouth. There were no features on the side of the Dodge that could have caused this damage based on the profiles of exemplar Dodges. Further, both headlights of the Plymouth were damaged. Given the profile of the Plymouth’s front end, Kodsi would not have expected its headlights to have contacted the Dodge at all, especially considering that there was no rearward deformation of components along the front end of the Plymouth.

Kodsi also concluded that the damage observed on the Plymouth did not correspond with the reported sequence of events. If the collision occurred as reported, Kodsi would have expected the Plymouth to have rotated in a counter-clockwise direction and the Dodge in a clockwise direction following the initial impact. As a result, and as confirmed using computer simulation software, a secondary impact would have been expected to the right rear of the Plymouth. In short, the collision, as reported, would have resulted in expected areas of damage to the Plymouth’s right front (the initial impact) and its right rear (the secondary impact). Instead, the Plymouth was observed to have damage along its full front and left rear. As well, if the Plymouth was travelling at 40-50 km/hr, as reported by Ms. Ahmed, the expected damage to the driver side of the Dodge would be expected to be significantly more than “none” as noted in the collision centre reports.

Kodsi had not reviewed photographs of the subject Dodge Caravan for its initial report. Instead, Kodsi’s opinion was based on exemplar Dodges. Kodsi was subsequently provided with photographs of the subject Dodge and asked to compare and contrast its damage to the reported sequence of events. Kodsi was also asked to determine whether the photographs changed the opinions contained in the initial report. The photographs provided to Kodsi showed the lower portion of the Dodge driver door dented inward. The door did not appear to close properly. There also appeared to be minor damage to the forward portion of the left rear door.

In its addendum report of September 14, 2010, Kodsi concluded that it remained their opinion that the damage on the Plymouth did not correspond with striking the Dodge. Concerns were repeated that the paint transfer marks did not match the silver colour of the Dodge and that the profile of the damaged observed on the Plymouth did not correspond to the profile of damage on the Dodge. Kodsi also made two further observations from its review of the photographs of the damage to the Dodge. Kodsi concluded that the damage to the Dodge indicated that, in all likelihood, “it was struck at a near perpendicular T-bone type of orientation, contrary to the reported information.” As well, the damage to the Dodge suggested that it was struck by a vehicle travelling at an impact speed of approximately 8 to 10 km/hr, again contrary to the reported information.

In its third and final report of June 27, 2011, Kodsi was asked to clarify and confirm “the areas of concern in this matter when comparing the physical damage with the reported sequence of event.” After reviewing its earlier findings, Kodsi concluded: “In summary, the physical damage sustained by the vehicles (or lack thereof) indicated that the Dodge was struck by another vehicle at a speed and an orientation that conflicts with the reported sequence of events. In other words, if any contact did occur between the Plymouth and the Dodge, it did not occur as reported.”

As noted, the Applicants did not appear at the hearing. I find it reasonable to infer from the Applicants’ non-attendance that they did not have evidence helpful to their position. In these circumstances, I accept Kodsi’s uncontroverted evidence that, if a collision did occur between the Plymouth and the Dodge, it did not occur as reported. I also find that, collectively, the inconsistencies noted by Kodsi between the Applicants’ reports of events and the physical evidence are material and raise at least a prima facie case that the accident was staged.

I note that the transcripts of the examinations under oath, which Kodsi appears not to have had as part of its review, also contain many inconsistencies. To give just one example, Ms. Ahmed stated that she did not know Ms. Osman and Ms. Mohamed very well, and had only met them a couple of times before. They were acquaintances of Mr. Abdulkadir. Ms. Osman, on the other hand, stated in her examination under oath that she only knew Ms. Ahmed. Interestingly, though, Mr. Abdulkadir stated in his examination that Ms. Osman and Ms. Mohamed were picked up together at the same location. While perhaps not material to the circumstances of the accident, this merry-go-round of “who knew whom” calls into question the veracity of the Applicants’ accounts.

In the absence of any evidence by the Applicants to counter the evidence presented to me, I am satisfied that Economical has established that the Applicants received accident benefits as a result of wilful misrepresentations.

Are the amounts that Economical seeks to be repaid “benefits”?

It is accepted that the amounts Economical seeks to be repaid for treatment, housekeeping and home maintenance, and caregiving are all “benefits” paid under the Schedule. The only issue of some concern was whether fees paid for the cost of an examination, pursuant to section 24 of the Schedule,⁴ constitute a “benefit.” Economical made submissions on this point based on its apparent misapprehension that Arbitrator Feldman, in Addae and Dominion of Canada General Insurance Company,⁵ had found that fees paid for any section 24 examination do not constitute a “benefit” under the Schedule. However, I read Arbitrator Feldman’s remarks as being limited to fees paid for designated assessments (DACs),⁶ not section 24 assessments generally. Arbitrator Feldman simply notes that there is no general right to repayment of fees paid for designated assessments under subsection 47(1)(a) as the circumstances giving rise to a claim for repayment of fees paid for designated assessments are specifically provided for in subsection 47(1)(e).

I therefore accept that all of the amounts that Economical seeks to be repaid for treatment, housekeeping and home maintenance, caregiving, and (non-DAC) section 24 examinations constitute “benefits” under the Schedule.

Were the amounts “paid to the person”?

Economical maintains that all amounts for which it seeks repayment were “paid to the person” as that phrase is intended by subsection 47(1)(a) of the Schedule.

In advancing its position, Economical relies on section 44 of the Schedule which provides:

44(1) An insurer shall pay a benefit under this Regulation,

(a) by mailing or delivering a cheque payable to the person entitled to the benefit to the address where the person ordinarily resides; or

(b) with the consent of the person entitled to the benefit, by electronic funds transfer to an account in the name of the person. O. Reg. 403/96, s. 44(1).

(2) Despite subsection (1),

(a) an insurer may arrange to be invoiced directly and to pay directly for goods or services provided in respect of an insured person;

(b) an insurer may pay a benefit into court under section 271 of the Insurance Act; or

(c) where the person entitled to the benefit has so directed in writing, an insurer shall pay the benefit directly to the person who submitted an invoice in respect of the benefit to a central processing agency in accordance with subsection 44.1 (1). O. Reg. 403/96, s. 44 (2); O. Reg. 533/06, s. 11.

Economical argues that all benefits are, at first instance, payable by an insurer to its insured (subsection 44(1)). It is simply by virtue of certain procedures available in subsection 44(2) of the Schedule affecting the method of payment that an insurer may find itself paying third party service providers and assessors directly. Economical submits that, where applicable, subsection 44(2) permits not only the timely and efficient payment of invoices, it also ensures that funds intended for third parties are not converted to an applicant’s own uses. However, Economical submits that subsection 44(2) does not change the character of these payments. They should continue to be treated as benefits “paid to the person” for the purposes of subsection 47(1)(a).

Economical acknowledges that prior decisions by Arbitrator Feldman⁷ and Arbitrator Allen⁸ (as she was then) have found that claims for repayment must be for benefits paid directly to an insured person, and that it is not enough that the payments were made to others on behalf of an insured person. However, Economical submits that, on this point, these prior decisions were wrongly decided. Economical maintains that, while Arbitrator Feldman specifically addressed subsection 44(2), he was incorrect to interpret payments made directly to third parties pursuant to that provision as not being amounts “paid to the person” for the purpose of subsection 47(1)(a). As for the Yusuf decision, Economical notes that Arbitrator Allen did not make specific reference to section 44. Economical suggests that the provision may not have been brought to her attention and, if it had been, she may have decided the issue differently.

Economical also submits that, if I adhere to a narrow interpretation of the phrase “paid to the person” in subsection 47(1)(a), “insurers will, in all likelihood, begin making all payments for the costs of Section 24 assessments to their insureds. This will have the effect of slowing and/or interrupting the flow of benefits to service providers/assessors and run contrary to the over-arching intent of the Statutory Accident Benefits Schedule and the efficient delivery of benefits.”

I have not been persuaded by Economical to depart from the interpretation of subsection 47(1)(a) provided by Arbitrators Feldman and Allen. I agree with them that the phrase “paid to the person” is clear and unambiguous. As Arbitrator Feldman notes, several provisions in the Schedule use the additional phrase “or on behalf of an insured person,”⁹ and “[i]t would have been a simple matter, therefore, for the drafters of the Schedule to have permitted insurers to claim repayment of benefits ‘paid to or on behalf of the [insured] person.’”

I also agree with Arbitrator Allen that it is a principle of statutory interpretation that provisions with punitive consequences should be read strictly. I am not persuaded that section 44 invites me to depart from a strict interpretation of subsection 47(1)(a) and “read in” the phrase “or on behalf of the person.” Nor am I convinced that Arbitrator Allen would have been so persuaded, assuming that she did not in fact consider section 44.

Finally, with respect to the argument that a strict interpretation will, in all likelihood, result in a flood of insurers paying the costs of examinations directly to insured persons, thereby “slowing or interrupting the flow of payments to third party service providers/assessors” contrary to the intent of subsection 44(2) and the “efficient delivery of benefits,” I simply note that the Yusuf decision was issued in May 2006 and the Addae decision in November 2007. I have no evidence that these decisions led insurers to alter their payment practices, and there is no reason to believe that this decision, which does not change the legal landscape, will lead them to do so.

In conclusion, I am satisfied that subsection 47(1)(a) of the Schedule only permits benefits paid directly to the insured person to be recovered in a claim for repayment.

What amounts are repayable to Economical?

With respect to Mr. Abdulkadir, Economical claims repayment of $1,129.35 for the costs of examinations, $4,416.08 for medical benefits, and $2,900.00 for housekeeping and home maintenance. Of these amounts, only $2,900.00 for housekeeping and home maintenance was paid directly to Mr. Abdulkadir. I therefore find Mr. Abdulkadir liable to repay Economical the amount of $2,900.00.

With respect to Ms. Osman, Economical claims repayment of $3,458.73 for the costs of examination; $5,158.07 for medical benefits; and, $2,157.16 for housekeeping and home maintenance. Of these amounts, only $2,157.16 for housekeeping and home maintenance was paid directly to Ms. Osman. I therefore find Ms. Osman liable to repay Economical the amount of $2,157.16.

With respect to Ms. Ahmed, Economical claims repayment of $2,400.01 for the costs of examinations; $9,711.42 for medical benefits; $2,500.00 for housekeeping and home maintenance; and, $9,942.84 for caregiver benefits. Of these amounts, only $2,500.00 for housekeeping and home maintenance and $9,942.84 for caregiver benefits (for a total of $12,442.84) were paid directly to Ms. Ahmed. I therefore find Ms. Ahmed liable to repay Economical the amount of $12,442.84.

With respect to Ms. Mohamed, Economical claims repayment of $263.72 for the costs of examinations; and, $4,285.26 for medical benefits. Neither of these amounts was paid directly to Ms. Ahmed. Economical’s claim for repayment of benefits paid to Ms. Mohamed is therefore dismissed.

EXPENSES:

It should be noted that the Abdulkadir, Osman and Ahmed matters were combined at an early stage and proceeded jointly to a pre-hearing, hearing of their substantive claims, and this repayment hearing. The Mohamed matter was the subject of a separate pre-hearing and a preliminary issue hearing into whether she had been involved in an accident. The Mohamed matter was only combined with the other three matters for the purpose of the repayment hearing.

Economical provided a Bill of Costs in support of its expenses. It covers all expenses claimed in all four matters. Fees and disbursements, as they relate to the Abdulkadir, Osman and Ahmed matters, are divided equally amongst those three files since they were handled together throughout. I accept this approach as appropriate. Economical’s Bill of Costs reflects a different (and somewhat lower) amount for fees and disbursements on the Mohamed matter since it was handled separately.

Fees

Economical claims fees of $2,833.40 inclusive of H.S.T. in each of the Abdulkadir, Osman and Ahmed matters. Even though these Applicants attended neither the hearing of their substantive claims nor the hearing for repayment, and even though Economical was not entirely successful in its claims for repayment against these Applicants, I do not find Economical’s fees in respect of these three matters to be unreasonable.

As for Ms. Mohamed, Economical claims fees of $2,633.08 inclusive of H.S.T. Given that Economical’s claim for repayment against Ms. Mohamed was unsuccessful, I find the claim for fees to be somewhat high.

Disbursements

Economical’s claims for disbursements are more problematic.

Economical claims a total amount of $16,276.90 inclusive of H.S.T. for disbursements. The disbursements are claimed as follows: $13,067.46 divided equally amongst the Abdulkadir, Osman and Ahmed matters ($4,355.82 each), and $3,209.44 for the Mohamed matter.

Economical’s disbursements include the cost of three expert reports from Kodsi Engineering in the amounts of $3,794.85, $1,692.18, and $2,887.15, for a total of $8,374.18. Economical has divided this expense equally amongst the four matters ($2,093.55 each). Economical also claims $2,887.14 for Mr. Kodsi’s preparation for and attendance at the hearing in the Abdulkadir, Osman and Ahmed matters on May 6, 2013, divided equally amongst those three matters ($962.38 each). Economical also claims for Mr. Kodsi’s preparation for and attendance at the repayment hearing on June 27, 2014 in the total amount of $3,192.24, divided equally amongst all four matters ($798.06 each).

The maximum amounts that may be claimed in respect of experts is provided for in paragraph 5 of the Schedule to the Expense Regulation. The maximum amounts are: $1,500.00 for the preparation of an expert report; $500.00 for preparation for a hearing at which the expert witness testifies; and, $200 per hour for the attendance of an expert witness at a hearing, up to a maximum of $1,600 per day.

Kodsi provided three reports: an initial report and two addendum reports. Even if I permit the maximum for each report, the total amount that I may award for these three reports is $4,500.00. As for Mr. Kodsi’s hearing preparation, I am unable to award any amount. While Mr. Kodsi attended on both May 6, 2013 and June 27, 2014, he did not testify on either occasion. Mr. Kodsi did, however, attend for about an hour on each date. I am therefore prepared to award $400.00 for his hearing attendances.

Economical also claimed $463.32 for the cost of a court reporter at the June 27, 2014 hearing. This type of expense is not provided for in the Expense Regulation and has been consistently denied.¹⁰ I also deny the claim.

I accept the balance of Economical’s claims for disbursements in the total amount of $1,239.45 for photocopies and amounts paid to secure OHIP and other medical records.

Total expenses payable

Having regard to the time spent, the types of expenses and maximum amounts permitted under the Expense Regulation, as well as Economical’s relative degrees of success as against each Applicant, I find it appropriate to fix expenses payable by each of Mr. Abdulkadir, Ms. Osman and Ms. Ahmed at $5,000.00 (inclusive of fees, disbursements and H.S.T.), and $2,500.00 (inclusive of fees, disbursements and H.S.T.) payable by Ms. Mohamed.

October 30, 2014

Robert Bujold Arbitrator

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mr. Abdulkadir shall repay to Economical the amount of $2,900.00 plus interest thereon at the rate of 1.3 percent per annum calculated from July 15, 2011.
2. Ms. Osman shall repay to Economical the amount of $2,157.16 plus interest thereon at the rate of 1.3 percent per annum calculated from July 15, 2011.
3. Ms. Ahmed shall repay to Economical the amount of $12,442.84 plus interest thereon at the rate of 1.3 percent per annum calculated from July 15, 2011.
4. Economical’s claim for repayment of benefits paid to Ms. Mohamed is dismissed.
5. Mr. Abdulkadir shall pay Economical’s expenses in the amount of $5,000.00 inclusive of fees, disbursements and H.S.T.
6. Ms. Osman shall pay Economical’s expenses in the amount of $5,000.00 inclusive of fees, disbursements and H.S.T.
7. Ms. Ahmed shall pay Economical’s expenses in the amount of $5,000.00 inclusive of fees, disbursements and H.S.T.
8. Ms. Mohamed shall pay Economical’s expenses in the amount of $2,500.00 inclusive of fees, disbursements and H.S.T.

October 30, 2014

Robert Bujold Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Mr. Abdulkadir, Ms. Osman and Ms. Ahmed had their claims dismissed at a hearing of their substantive claims on May 6, 2013. Ms. Mohamed’s substantive claims were dismissed at a preliminary issue hearing into whether she had been involved in an accident, which was held just prior to this hearing for repayment.
3. 3It appears from the record that Ms. Mohamed failed to answer section 33 requests for a statement regarding details of the accident. It is not clear whether Ms. Mohamed was ever asked to attend an examination under oath. Ms. Mohamed’s representations regarding the accident appear to be limited to those contained in her Application for Arbitration.
4. 4Now section 25
5. 5(FSCO A06-000202, November 9, 2007)
6. 6Provided for in paragraph 8 of Section 24(1)
7. 7Addae, supra, fn 5; and, Sadozai and Aviva Canada Inc. (FSCO A11-002727, February 14, 2014)
8. 8Yusuf and Ahmed and TD Home and Auto Insurance Company (FSCO A04-001797 and A04-001522, May 31, 2006)
9. 9See, for example, sections 16, 17, 20, 21 22, 23 and 24.
10. 10For a list of cases that have denied the costs of a court reporter, see Sadozai, supra, fn. 7.