Certas Direct Insurance Company v. K.P., 2019 CanLII 76838

Tribunal File Number: 18-005710/AABS

In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8., in relation to statutory accident benefits.

Between:

Certas Direct Insurance Company

Applicant

and

K.P.

Respondent

DECISION

ADJUDICATOR: Kimberly Parish

For the Applicant: Nadia Costantino, Lawyer

For the Respondent: no written submissions received

Written Hearing: December 3, 2018

OVERVIEW

1The respondent (“K.P.”) was injured in an automobile accident (“the accident”) on October 24, 2015 and sought insurance benefits pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010¹ (the ''Schedule'').

2The applicant’s position is that they paid the respondent an income replacement benefit (“IRB”) in the amount of $6,028.75 for the period October 31, 2015 - May 26, 2016 and the applicant submits that the respondent was working during this period and that he wilfully misrepresented to the applicant that he was not working during this period. The applicant filed an application with the Licence Appeal Tribunal – Automobile Accident Benefits Service (the “Tribunal”) seeking a repayment of the IRB for that period.

3A case conference was conducted on October 3, 2018, but the respondent, who is self-represented, did not attend. The case conference proceeded in his absence, and the matter was set for a written hearing on the issue of the IRB repayment issue. Notice of the hearing was provided by the Tribunal and it noted the correspondence was also sent by mail directly to the respondent.

4The applicant filed written submissions for this hearing. There were no submissions or evidence filed by the respondent for this hearing.

ISSUES

5The issues in dispute are as follows:

(i) Is the applicant entitled to a repayment of the income replacement benefit paid to the respondent in the amount of $6,028.75 for the period from October 31, 2015 to May 26, 2016 pursuant to section 52 of the Schedule?

(ii) Is the applicant entitled to interest on any overdue repayment of benefits?

RESULT

6I find the applicant is entitled to a repayment of the IRB in the amount of $6,028.75 plus interest in accordance with the Schedule.

ANALYSIS

Law

7Section 52 of the Schedule states that a person is liable to repay the insurer if any benefit is paid to the person as a result of an error, wilful misrepresentation or fraud.²

8The insurer must give notice within 12 months after the payment is made otherwise the person ceases to be liable.³ The 12-month stipulation does not apply if the benefit was paid as a result of wilful misrepresentation or fraud.⁴

9There are four questions which I need to answer to be able to determine whether the respondent is liable to repay a portion, or all of the IRB which he received. The four questions are as follows:

(i) Was the respondent employed during the time period which is in dispute?

(ii) Did the applicant provide adequate notice to the respondent?

(iii) Was the notice timely?

(iv) Was the IRB paid as a result of wilful representation on the part of the respondent?

10The applicant bears the onus to prove, on a balance of probabilities, that it is owed repayment of IRBs.

Was the respondent working during the period of October 31, 2015 - May 26, 2016?

11I find the respondent was employed during the period of October 31, 2015 – May 26, 2016 based upon the following:

1. A signed statement dated December 7, 2015 was completed and signed by the respondent which noted the respondent had not worked since the accident. The Declaration of Post-Accident Income (“OCF-13”) which was submitted and signed by the respondent and noted the respondent had not earned any income from any sources since the accident. Surveillance was conducted on the respondent by the applicant on May, June, and November of 2016, and the respondent was observed working as a kitchen hand at [a restaurant.]

2. The respondent attended an examination under oath (“EUO”) on December 5, 2016 and confirmed at the EUO that he had reviewed and signed the OCF-13 and confirmed he had earned no post-accident income. After being provided with copies of the surveillance obtained by the applicant he confirmed working occasionally at [a restaurant] for cash payments but denied being an employee. The applicant requested employment-related documents from the respondent pursuant to s. 33 of the Schedule but did not receive a response to these requests.

3. The applicant confirmed the respondent earned post-accident income when Marissa Teteris (“Ms. Teteris”), an investigator employed with the special investigations unit with Certas Direct Insurance (applicant) attended the applicant’s workplace on November 17, 2016 and spoke with the respondent’s General Manager and Director of Operations. They confirmed the respondent had been working at [a restaurant] as a full-time salaried sous chef and had worked 15 hour shifts since the commencement of his employment in October or November 2015 until at least November 17, 2016.⁵ The applicant submits this information had never been disclosed to them by the respondent.

Did the applicant provide notice to the respondent as required by the Schedule?

12I find that the applicant provided sufficient notice to the respondent as required by the Schedule for the following reasons:

1. On August 28, 2017, the applicant wrote to the respondent’s legal counsel at that time and carbon copied the respondent. The applicant advised they believed the respondent had willfully represented material facts relating to his post-accident employment and income earned and his IRB was being terminated in accordance with s. 53 of the Schedule. The letter provided the notice as required under s. 52(2)(a) of the Schedule. The letter stipulated the amount that is required to be repaid and the reason for the overpayment.

2. The applicant provided the respondent with an Explanation of Benefits (EOB”) dated December 6, 2017 which again advised the respondent that a repayment of IRBs was being sought for the period of October 31, 2015 - May 26, 2016 in the amount of $6,028.75. Further, the EOB noted the applicant reserves the right to charge interest which would start September 12, 2017 pursuant to s. 52(5) of the Schedule.

3. The applicant submitted an application to the Tribunal on January 28, 2018 requesting a repayment of the IRB. The respondent did not submit a response to the application, nor did the respondent attend the case conference on October 3, 2018.

Was the notice provided by the applicant timely?

13Section 52(3) of the Schedule states that the obligation to repay an overpayment does not apply unless a notice, as required by section 52(2), is given within 12 months after the overpayment was made.

14In the case before me, the letters from the applicant were not issued within 12 months after the overpayment was made, as required in section 52(3) of the Schedule. However, section 52 of the Schedule noted that the 12-month period does not apply if the amount “was originally paid… as a result of wilful misrepresentation or fraud.” I will now address if there has been a wilful misrepresentation made by the respondent.

Was the IRB Paid as a Result of Wilful Representation on the Part of the Respondent?

15I find there was a deliberate intention on the part of the respondent to wilfully misrepresent material facts to the applicant to receive payment of IRBs. I base this finding on the following:

(i) The respondent’s signed statement dated December 7, 2015 which was provided to the applicant noted he had not worked anywhere since the accident;

(ii) The respondent further stated at the EUO on December 5, 2016 that he had reviewed and signed the OCF-13 which noted he had not earned any post-accident income, but he then confirmed after reviewing the surveillance evidence that he had occasionally worked for cash payments at [a restaurant] and;

(iii) The respondent attended an I.E. assessment of IRBs on June 2, 2016 with Dr. K. McCutcheon, psychologist. Her report dated July 19, 2016 noted that the respondent stated he had not worked in any capacity since the accident.

16The applicant relies on the jurisprudence of this Tribunal and specifically the case of Aviva Canada v. S.A.⁶ in which the insurer sought repayment of an IRB on the basis that the IRBs were paid based upon material misrepresentations made by the respondent. Adjudicator Bass was persuaded by the case of Michalowski and St. Paul Fire and Marine Insurance⁷ which was before the Financial Services Commission of Ontario (“FSCO”) where the Arbitrator set out the test for determining misrepresentation. The Arbitrator held that the onus remains with the insurer to prove the provision applies to the respondent based on the factual situation therein, and if so, that the respondent had made a misrepresentation which was wilful, and what was misrepresented were material facts pertaining to the application for IRBs.

17The Tribunal decision of Certas v. T.T.⁸ was also relied on by the applicant as Adjudicator Johal confirmed the test for misrepresentation as set out in Michalowski. It was Adjudicator Johal’s finding that silence on the part of the respondent can constitute a wilful misrepresentation and concluded that as result of the respondent’s failure to advise the insurer of his return to work, his subsequent termination from work, and then stating to two insurance examination (“IE”) assessors that he had not returned to work following the accident constituted a wilful misrepresentation.

18I am persuaded by the case Aviva Canada v. S.A produced by the applicant and agree that the test for misrepresentation is set out within Michalowski. I find the facts of this case are very similar to the facts which were before Adjudicator Johal in Certas v. T.T. and I find that case to be extremely persuasive.

19I find there was a deliberate intention on the part of the respondent to wilfully misrepresent material facts to the applicant which led to him being paid IRBs for the period October 31, 2015 - May 26, 2016. The respondent’s signed statement of December 5, 2017 and the OCF-13 which he confirmed completing and signing both noted he had not worked since the accident and received no post-accident income. After reviewing the surveillance at the EUO, the respondent then stated that he worked occasionally for cash at [a restaurant]. The respondent then stated to Dr. McCutcheon at the I.E. assessment in June 2016 that he had not worked in any capacity since the accident. Therefore, I find the respondent was not entitled to receive an IRB as the result of his wilful misrepresentation regarding his employment status.

CONCLUSION

20For the reasons outlined above, I find that find that the respondent was not entitled to receive an IRB for the period of October 31, 2015 to May 26, 2016 as I have found these benefits to have been as a result of wilful misrepresentation. The respondent is therefore liable to repay to the applicant $6,028.75 plus interest in accordance with section 52 of the Schedule.

Footnotes

1. 1O. Reg. 34/10
2. 2S.52(1)(a) of the Schedule
3. 3Section 52(2)(a) and 52(3) of the Schedule
4. 4Section 52(3) of the Schedule
5. 5Affidavit of Maria Teteris (Sworn November 1, 2019), tab 6 included with the applicant’s submissions
6. 616-000409 Aviva Canada v. S.A, 2016 CanLII 96164 (ONLAT), at paras 23-25
7. 7A98-001492 Michalowski and St. Paul Fire and Marine Insurance, FSCO, July 9, 1999
8. 817-000272 Certas v. T.T, CanLII 87539 (ONLAT), at paras 21-31