Abdi Hassan v. State Farm Mutual Automobile Insurance Company, 2015 ONFSCDRS 44

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2015 ONFSCDRS 44

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BETWEEN:

ABDI HASSAN

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Arbitrator John Wilson

Heard: June 20, 2014, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Ryan Mullins for State Farm Mutual Automobile Insurance Company Mr. Hassan was not represented.

Issues:

The Applicant, Abdi Hassan, claimed to have been injured in a motor vehicle accident on February 27, 2010. He applied for statutory accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.¹ State Farm terminated weekly income replacement benefits The parties were unable to resolve their disputes through mediation, and Mr. Hassan applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

Is Mr. Hassan barred from proceeding with his accident benefit claim by reason of a wilful misrepresentation of material facts with respect to the alleged accident and his claim for accident benefits?
Is Mr. Hassan required to repay to State Farm those benefits he received as a result of his misrepresentation?

Result:

Mr. Hassan is barred from proceeding with his accident benefit claim by reason of a wilful misrepresentation of material facts with respect to the alleged accident and his claim for accident benefits.
Mr. Hassan is required to repay $41,036.44 to State Farm as reimbursement for those benefits he received as a result of his misrepresentation.

EVIDENCE AND ANALYSIS:

Mr. Hassan claimed to have been a rear seat passenger in a silver Toyota Sienna when it rear-ended another vehicle at an intersection in north Toronto. The accident report identifies the location of the accident as Finch Avenue near Bayview, while Mr. Hassan has variously described it as travelling along Bayview, or Finch and most improbably, Avenue Road and Finch.

Mr. Hassan has stated that he was an unbelted passenger in the vehicle and was thrown forward against the driver’s seat, breaking his glasses and causing pain to his right shoulder and lower back. He did not remember if the airbags were triggered by the collision.

Mr. Hassan was said to have attended at a walk-in clinic some days after the accident, and then proceeded to obtain treatment from a clinic which he identified as Goodlife. The treatment included massage, physiotherapy and acupuncture.

Around the same time, Mr. Hassan filed a claim against State Farm for certain accident benefits. Since he was not employed at the time of the events giving rise to the claim, no income benefits were payable and the claim consisted of primarily housekeeping expenses and medical examinations, as well as reimbursement for the treatment modalities provided by the clinic. After the statutory waiting period, Mr. Hassan also claimed and was paid, a non-earner benefit.

State Farm paid Mr. Hassan accident benefits based on the information provided by him including a description of the accident and its consequences, and summaries of services provided by his housekeeper.

At some point, as the claim progressed, State Farm began to question Mr. Hassan’s version of events surrounding his claim and asked for further information to satisfy their concerns.

Ultimately, Mr. Hassan was asked to participate in an examination under oath, which he attended on May 1, 2012. His answers, however, didn’t satisfy State Farm’s concerns. Indeed the vagueness and the apparent contradiction of some of the information provided under oath only heightened their concerns.

At the pre-hearing of this matter which took place on April 1, 2014, State Farm advised that it would request that Mr. Hassan’s claim be dismissed on the basis of the incongruities in his account of the accident. It also advised that it would be claiming a repayment of benefits already paid, should it be successful on the first issue.

The parties agreed that these issues should be dealt with as a preliminary issue. The issue to be heard was whether Mr. Hassan’s claim was barred by reason of wilful material misrepresentation. It was also agreed that the hearing would be based on written materials only with the option for the parties to provide brief oral submissions.

Subsequent to the pre-hearing but prior to the preliminary issue hearing Dang Co “Eddy” Trieu, counsel for Mr. Hassan was removed as counsel of record, apparently at Mr. Hassan’s request. Mr. Hassan had not retained further counsel nor requested an adjournment prior to the scheduled preliminary issue hearing.

Material Misrepresentation:

Under section 48(1) and (2) of the Schedule,

An insurer may terminate the payment of benefits to or on behalf of an insured person,

(a) if the insured person has wilfully misrepresented material facts with respect to the application for the benefit; and

(b) if the insurer provides the insured person with a notice setting out the reasons for the termination. O. Reg. 34/10, s. 53

In accordance with both common law, and the Schedule, an insured who misrepresents a material fact in the context of a claim may be barred from claiming the proceeds of the insurance in question.

What this means is that false or misleading information that is relevant to the claim must be knowingly or intentionally provided to the Insurer. Patently an innocent misstatement of a collateral fact would not have the same effect. In this case the information in question relates the events giving rise to the claim: the accident itself.

While Mr. Hassan, in order to be successful in his claim for accident benefits, has the burden of proof in establishing that he meets the legislative criteria for the benefits claimed, in this preliminary issue hearing the onus is not as straightforward as the Insurer suggests. As Viscount Dunedin stated in Robins v. National Trust Co., 1927 CanLII 469 (UK JCPC), [1927] A.C. 515 “Onus is always on a person who asserts a proposition or fact which is not self-evident.”

Since State Farm has brought a motion requesting a finding that a fraudulent claim took place and that the benefits received must consequentially be disgorged, it has an initial burden of proving the facts it relies upon in making those assertions. To that end State Farm filed a complete motion record including the documentary evidence it relied upon. Mr. Hassan filed nothing.

The direct consequence of Mr. Hassan not filing any evidence or submissions and consequently failing to meet the evidentiary burden of proving his claim would be a finding that he is not entitled to the benefits claimed in this arbitration.

State Farm, however, has alleged that Mr. Hassan not only does not merit the benefits claimed but that he is guilty of misleading the insurer to obtain benefits, essentially committing fraud. It goes without saying that a simple failure to meet the test for entitlement to benefits, by itself, does not support the drawing of an inference that an applicant committed fraud in his or her pursuit of benefits. What is required is evidence that specifically supports a finding of fraud. Usually that evidence will come from the Insurer.

As noted earlier, it is clear that State Farm doubted that an “accident” ever happened, and even if it had that Mr. Hassan was in the car at the time.

The Schedule defines an accident as follows:

“accident” means an incident in which the use or operation of an automobile directly causes an impairment or directly causes damage to any prescription eyewear, denture, hearing aid, prosthesis or other medical or dental device; (“accident”)

Implicit in this definition is the notion that the “incident” must be unintended and not intentional.

By way of context there have been a multitude of accident benefit cases where claimants have been accused by Insurers of creating or participating in planned “accidents” with the goal of claiming undeserved accident benefits.

In Mr. Hassan’s case, he claimed to have been a passenger in a car which he could not clearly identify (He says silver, the photographs say red…) accompanied by persons, apparently unknown to him travelling to a claimed destination that appeared to be in the opposite direction of the route actually taken. In addition, Mr. Hassan swore in his examination under oath that the accident took place at the non-existent intersection of Avenue Road and Finch, whereas a majority of other reports placed the alleged accident somewhere around Bayview and Finch. Indeed Mr. Hassan in other information given to assessors, allegedly reported that he was variously travelling on Finch Avenue, or travelling along Bayview Avenue or just at the intersection of Finch and Bayview.

Likewise, Mr. Hassan variously reported that he hit the left side of his body with the door, hit his right shoulder on the driver’s seat, or didn’t recall hitting his head or any other part of his body in the “accident”. In his sworn statement (EUO) he claimed to have hit both his head and right shoulder. In the accident report the box provided for reporting injuries next to his name was left empty.

There were similar inconsistencies reported with regard to his attendance at an unknown family doctor and other medical facilities for treatment following the accident. “Sketchy” would be a generous description of Mr. Hassan’s recall of his initial treatment and his ultimate referral to a treatment facility.

There was no attendance at the accident scene by police, fire or ambulance, and consequentially no official reports that confirm Mr. Hassan’s presence, or indeed whether an accident happened at all. The only related document is a self-reporting accident report made at a collision centre after the accident that lists Mr. Hassan’s name but neither provides his particulars nor lists any injuries suffered by Mr. Hassan in the collision, even though the form specifically requests such details.

There could well be an explanation for Mr. Hassan’s confusion as to the accident-related events. Perhaps English was not his first language. Perhaps after having spent some time away from Canada, his concept of Toronto geography was somewhat weakened. Perhaps there is an explanation, but Mr. Hassan did not provide one.

While the litany of inconsistencies would suggest that Mr. Hassan is a poor historian, or simply not credible, the inconsistencies, in themselves do not clearly establish that he intentionally misled the insurer on a material point. Rather Mr. Hassan’s tortured storyline, rings hollow and calls out for an explanation.

Halsbury’s Laws of Canada — Civil Procedure (2012 Reissue) summarizes the evidentiary burden in such cases as follows:

In general, the obligation is on the plaintiff to make out a prima facie case — that is, to provide sufficient evidence to support judgment in his or her favour. If the plaintiff fails to meet this standard, then the defendant is entitled to judgment as of right. If the plaintiff establishes a prima facie case, then the defendant must lead evidence to rebut it.

Professors Perciocco and Stuesser in The Law of Evidence (Toronto, 1999) characterise “prima facie” evidence as follows:

A prima facie case exists when there is evidence, on each of the elements of the offence, which, if believed to be true, would enable a reasonable trier of fact to convict.

In this matter, I accept that the Insurer provided what can be seen as at least prima facie evidence supporting its allegations and at that point the burden shifted to Mr. Hassan to respond, to put his best foot forward and counter State Farm’s evidence or suffer the consequences. Needless to say he didn’t.

I find it appropriate to draw an inference from Mr. Hassan’s failure to respond that the Insurer’s carefully outlined list of inconsistencies and contradictions in Mr. Hassan’s story of the accident. The inference is simply that those contradictions and inconsistencies appear in the narrative because Mr. Hassan wasn’t indeed present at the “accident” scene and wasn’t prepared enough to follow the script for the event set out by whoever organised the event.

Consequently, I find that Mr. Hassan intentionally misled the insurer as to the fundamental fact of his participation in the alleged accident, a fact which grounded his entire accident benefit claim from the Insurer. As such it was material to the claim.

The details of the housekeeping claim present even clearer grounds for accepting that a material misrepresentation was knowingly made, one that is clearly and directly related to Mr. Hassan’s obtaining insurance benefits from State Farm.

In his examination under oath, Mr. Hassan repeatedly stated that the housekeeping assistance he received from “Guled” and “Abdi” stopped “two months after” (the accident). At the same time Mr. Hassan, through his lawyer, submitted housekeeping receipts from April 25, 2010 to February 26, 2011.

These documents clearly represent that housekeeping services were provided, and, indeed, the covering letters from the law firm request that the amounts on the invoices be paid.

These forms, headlined “Expenses Service Provided” appear to be signed by both Mr. Hassan and the “service provider” and cover over a year of claimed services, a substantial portion of which Mr. Hassan has sworn were not provided.

In the absence of any explanation from Mr. Hassan, I accept that a clear inference can be drawn that for all but the two month period referred to by Mr. Hassan, he knowingly forwarded claims outlining services that were never provided in the expectation that State Farm would act upon them and pay the money he had falsely claimed was owing to him.

By any definition it was misrepresentation, and indeed material to the claim being made. It was also intentionally issued by him or at the very least, on his behalf by his counsel, who was clearly authorised to represent him.

Repayment

Section 47(1)(a) of the Schedule sets out the obligation to repay benefits in the event of error, wilful misrepresentation or fraud.

Subject to subsection (3), a person is liable to repay to the insurer,

(a) any benefit described in 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;

The Insurer sent a notice to Mr. Hassan on March 21, 2014 reclaiming some $41,036.44 in benefits already paid. Since the notice listed material misrepresentation as the reason for the repayment claim, the one year limitation to repayment does not apply, and all benefits paid to Mr. Hassan were in issue.

Even if one interprets the repayment provisions narrowly and limits each incident of misrepresentation to a corresponding, directly related benefit, even then I would find that Mr. Hassan is exposed to a complete repayment since the misrepresentation surrounding the accident goes to the foundation of the entire claim.

Having found that Mr. Hassan willfully misrepresented material facts in his claim against State Farm and noting that State Farm provided the requisite notice and reasons for repayment, I find that Mr. Hassan is required to repay in full all the accident benefits paid to him.

EXPENSES:

I may be spoken to regarding expenses incurred in this preliminary issue hearing, provided that the party claiming expenses serves and file a brief expense summary which, including any submissions must not exceed eight pages. This must be done within 30 days of the delivery of this decision.

March 10, 2015

John Wilson Arbitrator

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