Citation: Del Grosso v. Intact Insurance Company, 2022 ONLAT 20-013318/AABS

Licence Appeal Tribunal File Number: 20-013318/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:

Christopher Del Grosso

Applicant

and

Intact Insurance Company

Respondent

DECISION

ADJUDICATOR:

Brian Norris

APPEARANCES:

For the Applicant:

Andrew Iacobelli, Counsel

For the Respondent:

Kadey B. J. Schultz, Counsel

HEARD: by videoconference followed by written submissions

OVERVIEW

1Christopher Del Grosso, (“the Applicant”), was involved in an automobile accident on April 30, 2018, and sought benefits from Intact Insurance Company, (“the Respondent”), pursuant to the Statutory Accident Benefits Schedule Effective September 1, 2010 (including amendments effective June 1, 2016), (“the Schedule”).

2The Respondent paid benefits to the Applicant, but later determined that the Applicant wilfully misrepresented information in his Application for Automobile Insurance. The Respondent terminated the Applicant’s entitlement to income replacement benefits, (“IRBs”), and seeks a repayment of benefits paid to-date. The Applicant disputes the Respondent’s decision to deny his entitlement to benefits and submitted an application to the Licence Appeal Tribunal - Automobile Accident Benefits Service (“Tribunal”) for resolution of the dispute.

PRELIMINARY ISSUES

3The preliminary issues to be decided in the hearing are:

1. Is the applicant excluded from receiving IRBs pursuant to section 31(1)(b) of the Schedule, because of material misrepresentations made in his insurance application?

2. Is the applicant required to repay $72,881.74 to the Insurer pursuant to section 52 of the Schedule, because of wilful misrepresentations made in his insurance application?

3. Is the Respondent entitled to interest on the outstanding balance of the amount to be repaid?

RESULT

4I find that the Applicant made material misrepresentations in his application for automobile insurance and is excluded from receiving IRBs pursuant to section 31(1)(b) of the Schedule.

5The Applicant is liable to repay $72,881.74 to the Respondent, plus interest pursuant to section 52 of the Schedule.

BACKGROUND

6The Applicant, a resident of Ontario, was the driver of a vehicle which was struck from behind in heavy traffic on an expressway in Michigan. At the time of the accident, the Applicant held a policy of insurance originating in Ontario, which he obtained by way of an Ontario Application for Automobile Insurance owner’s Form (OAF 1) dated March 15, 2017. There is no dispute that the Applicant sustained injuries as a result of the accident which, according to the limited evidence before me, were significant enough that they impaired him from engaging in the essential tasks of his pre-accident employment.¹

7The Schedule contemplates that insured persons will be involved in accidents in jurisdictions outside of Ontario. Where an insured person is involved in an accident in another jurisdiction in Canada or the United States of America, section 59(2)2 provides that the insured person is permitted to opt to receive benefits from their Ontario insurance carrier pursuant to the Schedule, or, “benefits in the same amounts and subject to the same conditions as if the person was a resident of the jurisdiction in which the accident occurred and was entitled to payments under the law of that jurisdiction” Section 59(3) provides that the Respondent shall pay benefits in accordance with the election made under subsection (2).

The Applicant Elected to Receive Benefits Pursuant to Michigan Law

8On May 8, 2018, the Applicant signed a statement with the title “Election of Benefits” which states his auto insurance policy number, the date of the subject accident, and acknowledged that he is entitled to elect benefits in accordance with either Ontario or Michigan Law and that his election cannot be changed after submitting the form. The Applicant noted on the form that he elects to receive Michigan benefits and signed and dated the document. After completing that form, the Applicant also completed a Michigan Motor Vehicle No-Fault Insurance Law Application for Benefits dated June 12, 2018.

9Between April 30, 2018, the date of the accident, and November 14, 2019, the Respondent paid the Applicant a total of $72,881.74 as a result of the claim. It characterizes the monies as Income Replacement Benefits, (“IRBs”), pursuant to the Schedule. The Applicant characterized the monies as Work Loss Benefits, (“WLBs”), pursuant to section 3107 the State of Michigan’s Insurance Code of 1956, (“No-Fault Insurance”).

The Respondent Alleges Material Misrepresentation and Requests Repayment

10In a turn of events, the Respondent sent notice to the Applicant on November 19, 2019, advising that, pursuant to section 31(1)(b) of the Schedule, it is terminating the Applicant’s entitlement to IRBs. The reason cited for the termination of benefits was due to material misrepresentation made on his Application for Insurance, which induced the Respondent to enter into the contract of automobile insurance. The Respondent requested a repayment of the $72,881.74, pursuant to section 52 of the Schedule, and advised that it may charge interest on the amount to be repaid, pursuant to section 52(5) and 52(6) of the Schedule.

11It is undisputed that the Applicant failed to report pertinent information in the Application for Auto Insurance, dated March 15, 2017. The AutoPlus Gold Report dated July 3, 2019 confirms that Applicant had an auto insurance policy cancelled within the last three years of the date of the Application for Auto Insurance and was involved in an at fault accident the day before the date of the Application for Auto Insurance. The Applicant failed to report those two events in the document, despite prompts in the Application for Auto Insurance for information on these types of events.

12It is also undisputed that, pursuant to section 59(2) of the Schedule, the Applicant is entitled to elect “(b)enefits in the same amounts and subject to the same conditions as if (he) was a resident of (Michigan) and was entitled to payments under the law of (Michigan).” Further, it is undisputed that the Applicant made his election when he submitted the May 8, 2018 Election of Benefits form.

ANALYSIS

The Dispute is Under the Jurisdiction of the Tribunal

13I find my jurisdiction over this dispute resolution process stems from section 280(1) of the Insurance Act. Section 280(1) of the Insurance Act governs the process for resolving “disputes in respect of an insured person’s entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled”. Section 280(2) provides that an application may be made to the Tribunal for resolution of such disputes, section 280(3) restricts the right of an insured person or insurer from proceeding in any court with respect to such disputes, section 280(4) provides that the dispute shall be resolved in accordance with the Schedule, and section 280(5) states that the regulations may provide for and govern the orders and interim orders that the Tribunal may make and may provide for and govern the powers and duties that the Tribunal shall have for the purposes of conducting a proceeding.

14This dispute involves the Applicant’s entitlement to benefits pursuant to section 59(2) of the Schedule. Thus, I have jurisdiction over the dispute resolution process pursuant to section 280 of the Insurance Act.

Did the Applicant Commit an Act of Material Misrepresentation?

15Pursuant to section 118 of the Insurance Act, R.S.O 1990, c.I.8 unless stipulated in the contract of insurance, a contravention of any criminal or other law will not, by that fact alone, render the policy unenforceable, except when the contravention is committed by the insured or by another person with the consent of the insured, with the intent to bring about loss or damage. The language and intent of section 118 is echoed in section 31(1)(b) of the Schedule, which provides that the Respondent may terminate IRBs, and other benefits, on account of a material misrepresentation that induced it to enter into the contract of automobile insurance.

16The omissions made by the Applicant are material. The information in the OAF 1, such as the persons driving and insurance history, is used to determine an insurer’s risk as it pertains to the policy. Reporting a history involving one or more at-fault accidents, as well as one or more previously cancelled policy/policies, leads to higher insurance premiums or a denial of coverage. Whereas, omitting the information has the inverse effect whereby the Applicant was offered a policy with lower premium payments than would be the case had that information been provided. The Applicant does not dispute the validity of the information in the AutoPlus report and does not deny that he had a policy cancelled and that he was involved in an at-fault accident that was never disclosed to the Respondent.

17The evidence shows that the Applicant failed to report the cancellation of a prior automobile insurance policy, and a prior at fault accident, and I find that he has committed an act of material misrepresentation, as described in section 31(1)(b). The Applicant was, literally, in an at fault accident the day prior to the date of his application for automobile insurance. Yet, he neglected to report it on the application, despite being prompted to do so. I find it highly improbable that the Applicant’s omission is inadvertent or innocent in any way, considering that one event occurred the day after the other.

Section 31(1)(b) of the Schedule

18Section 31(1)(b) of the Schedule provides that the Respondent is not required to pay …an income replacement benefit, a non-earner benefit or a benefit under section 21 (lost educational expenses), 22 (expenses of visitors), or 23 (housekeeping and home maintenance), in respect of any person who has made, or who knows of, a material misrepresentation that induced the insurer to enter into the contract of automobile insurance or who intentionally failed to notify the insurer of a change in a risk material to the contract.

19The Applicant’s position can be paraphrased as follows; the Respondent is unable to rely on the provisions in section 31(1)(b) of the Schedule to deny the Applicant’s entitlement to WLBs because the Schedule does not apply once he elects benefits under the Michigan No Fault Scheme and, therefore, the Respondent is unable to apply the provisions to disqualify him from receiving WLBs and is unable to employ section 52 of the Schedule and demand repayment of WLBs.

20Adjacent to the Applicant’s submissions is the testimony of his expert witness, Stephen Sinas, a lawyer and law professor. Mr. Sinas opined that there is no similar disqualifying provision in the Michigan legislation and, instead, the disqualifying provisions in Michigan are as a result of court-based decisions, otherwise known as the common law.

21In the alternative, the Applicant takes the position that, if the Respondent is permitted to employ section 31(1)(b), it does not apply to him because he received WLBs under the Michigan No Fault Scheme and not IRBs. He submits that, because of this distinction, the disqualifying language in section 31(1)(b) is not applicable because that section specifically refers to IRBs and makes no reference to WLBs.

22The Respondent submits that it is unequivocal that the Applicant would not be entitled to IRBs, had the accident occurred in Ontario. It further submits that it would be absurd to allow the Applicant to receive WLBs if his entitlement to IRBs is excluded pursuant to section 31(1)(b) of the Schedule. To the Respondent, the Applicant is attempting to circumvent the law in Ontario and his contractual obligations under his policy of automobile insurance by arguing that the procedural law of Ontario should not apply to a claim for WLBs flowing from an accident in Michigan.

Does Section 31(1)(b) permit the Respondent to Terminate the Applicant’s weekly benefits, be it IRBs or WLBs?

23I find that reference to an income replacement benefit in section 31(1) includes the benefits paid to the Applicant, pursuant to Michigan law. IRBs and WLBs are effectively the same benefit. The benefits include similar qualifying provisions – that the insured person must be employed prior to the accident and sustain an impairment which prevents the insured person from completing the essential tasks of their employment. The benefits have the same effect. The benefits compensate an insured person for lost wages due to an accident-related impairment.

24The Applicant is insured in Ontario and was paid benefits pursuant to the Schedule. His ability to elect to receive “(b)enefits in the same amounts and subject to the same conditions as if the person was a resident of the jurisdiction in which the accident occurred and was entitled to payments under the law of that jurisdiction,” pursuant to section 59(2)2, is contingent on him satisfying the criteria in section 59(1). The two criteria in section 59(1) are 1) the insured dies or sustains an impairment or incurs an expense described in section 15, 16, or 19; and 2) no benefits are received under the law of the jurisdiction in which the accident occurred. Undoubtedly, the Applicant sustained an impairment and satisfies the first criterion. With respect to criterion two, I find that the Applicant received no benefits under Michigan law as he elected to collect benefits from his Ontario insurer at the rate pursuant to Michigan law. With this in mind, I conclude that the benefits paid to the Applicant fall under the umbrella of IRBs but are paid pursuant to the same amounts and subject to the same conditions as if the Applicant was a resident of Michigan and entitled to payments under that jurisdiction.

25Section 31(1) uses the terms IRBs because the benefits paid pursuant to section 59(1)2 are IRBs. The IRBs that the Applicant received, were paid at the rate and subject to the conditions as if he was a resident of Michigan and entitled to benefits pursuant to Michigan law. It would be unreasonable for the Schedule to list the name of each benefit parallel to the benefits mentioned in the exclusion noted in section 31(1)(b) of the Schedule. The Schedule provides no-fault insurance coverage throughout North America, including many jurisdictions, each with their own laws pertaining to accident benefit coverage and is unable to list all the types of benefits available throughout.

26I agree with the Respondent and reject the notion that IRBs and WLBs are substantially different, as iterated by Mr. Sinas. The witness provided an affidavit that stated that the two benefits are substantially different in terms of amounts, duration, and fall under a substantially different standard. Yet, the affidavit and testimony at the hearing included no analysis on the amounts and duration of the benefits and provided no clear rationale for how benefits were determined to be substantially different. As a result, I find this position unpersuasive because there is no information or analysis to demonstrate why or how IRBs and WLBs are substantially different in any way. In contrast, the Respondent suggests that there is no relevant distinction between IRBs and WLBs, and that the Applicant remains disentitled regardless of any distinction

27If the operation of section 59(2) was to have the effect of allowing insured persons to opt out of the application of the Schedule entirely, it would say so. Instead, the provision states that the Applicant may receive “(b)enefits in the same amounts and subject to the same conditions as if the person was a resident of the jurisdiction in which the accident occurred and was entitled to payments under the law of that jurisdiction”. In other words, section 59(2) permits the Applicant to receive benefits pursuant to the Schedule, but subject to the rate and conditions specific to WLBs, the income replacement benefit under Michigan law.

28The distinction is briefly noted in the reconsideration decision of 17-000608 v. TD Home and Auto Insurance Company.² In that decision, the executive chair mentioned that the Applicant in that case received “..benefits… at the Michigan Personal Injury Protection (“PIP”) level” after making an election pursuant to section 59 of the Schedule. The fact that the Executive Chair specified benefits at the Michigan level suggests that, for that decision, the benefits received by the Applicant were not WLBs but rather, benefits at the level commensurate with WLBs.

29Distinguishing the WLB payments from IRBs would permit an insured person to circumvent the provisions in section 31(1)(b), which is an absurd result and contrary to the aim of the legislation. In the right conditions, such as the Applicant’s, a person could commit material misrepresentation on their insurance policy in Ontario and then, opt out of the Schedule and opt to be subject only to Michigan law to avoid the disqualifying provisions in section 31(1). It is absurd to permit the applicant to receive WLBs under circumstances which would bar him from receiving IRBs.

30Regardless of whether the benefits are called IRBs or WLBs, they are both paid under the Schedule and the legal resolution of disputes pertaining to entitlement under the Schedule must be resolved through this Tribunal, pursuant to section 280(3) of the Insurance Act. Further, section 280(4) bars the parties from applying to any court, including Michigan, for resolution of a dispute in respect of an insured person’s entitlement to statutory accident benefits or in respect to the amount of statutory accident benefits to which an insured person is entitled, leaving it without an opportunity to pursue a rescission and repayment claim under the common law of Michigan. That is, the Respondent is left without a venue to resolve the dispute, unless this Tribunal has jurisdiction to impose the common law remedies of Michigan – which I will address later. In the event that the Tribunal is unable to impose the common law principles, the scenario would be contrary to the purpose of section 31(1), which is to limit the coverage to injured persons who obtain their auto insurance policy by way of misrepresentation or fraud.

31I find that, relevant to this hearing, the intention of section 31(1)(b) of the Schedule is to dissuade fraud and/or misrepresentation in the insurance industry and limit the liability of an insurer in the event that it engages in a contract of automobile insurance with someone, based on a material misrepresentation, while maintaining coverage for an injured persons medical and rehabilitation benefits, limiting the burden imposed on the public healthcare system.

32I agree with the Respondent that similar disqualifying language, as it refers to misrepresentation, is included in Section 233(1) of the Insurance Act, which is harmonious with section 31(1)(b) of the Schedule. Sections 31 of the Schedule and section 233 of the Insurance Act provide that a claim by an insured person is invalid and the right of the insured person to recover indemnity is forfeited where an applicant for a contract knowingly misrepresents or fails to disclose in the application (for automobile insurance) any fact required to be stated therein. Section 233(2) states that the operation of section 233(1) does not invalidate such statutory accident benefits as set out in the Schedule. Sections 233(1) and 233(2) of the Insurance Act and section 31(1)(b) of the Schedule stipulate that a misrepresentation, such as failing to disclose a prior at-fault accident or a previously cancelled auto insurance policy, disentitles the Applicant from certain benefits such as specified benefits. The effect of this disentitlement is that the Applicant is left with coverage only for, predominantly, medical and rehabilitation benefits, maintaining the public policy of reducing the burden that accident victims place on the public healthcare system.

33I reject the Applicant’s position that section 233 of the Insurance Act carves out an exception for WLBs and agree with the Respondent that it would be absurd to conclude that the Applicant is not eligible for IRBs on account of material misrepresentation but remains eligible for WLBs in the same scenario. The Applicant notes that the provision in section 233(2) of the Insurance Act overrides the misrepresentation provision in section 233(1) of the Insurance Act and permits him to receive WLBs because they are not statutory accident benefits as set out in the Statutory Accident Benefits Schedule. I find that the Applicant’s position fails to appreciate that the term “set out” is used throughout the Schedule and, most notably, in section 2(3) of the Schedule, which provides that “(t)he benefits set out in (the Schedule) shall be paid by the insurer that is liable to pay under subsection 268(2) of the (Insurance) Act”, which enabled him to receive benefits in the first place. Similar to the other provisions discussed, I find that section 233 of the Insurance Act is another example where consequences for wilful misrepresentation are prevalent while maintaining a compassionate public policy provision of ensuring that persons injured in an auto accident are able to receive reasonable and necessary medical and rehabilitation benefits.

34The Respondent’s interpretation of the Schedule follows general principles of contract law whereby an enforceable contract requires a meeting of the minds, amongst other things. In this case, the Applicant’s failure to disclose his accident and automobile insurance policy history caused the Respondent to enter into a contract on false pretences. Generally, the contract law remedy would be to put the parties back in the position they were in if the contract never occurred. Section 31(1)(b) of the Schedule and section 233(1) and 233(2) of the Insurance Act contemplate the Applicant’s situation and, instead of voiding the contract ab initio (from the beginning), provides him with coverage for medical and rehabilitation benefits, thus limiting the burden imposed on the public healthcare system. Whereas, pursuant to Michigan law and confirmed by the witnesses at the hearing, the remedy for a material misrepresentation is to void the contract ab initio, which includes cancelling entitlement to all benefits, including any benefits similar to the medical and rehabilitation benefits noted in the Schedule. Of note, and contrary to the Respondent’s submissions on the similarities in the legislative language, I find that section 118 and section 447(2)(a.1) of the Insurance Act have virtually no application to the Applicant’s case. Though, both sections employ the same overarching policy that one should not benefit from acts of fraud or misrepresentation.

35Section 118 of the Insurance Act applies to life insurance policies and provides that, “(u)nless the contract states otherwise, a contravention of any criminal or other law in force in Ontario or elsewhere does not, by that fact alone, render unenforceable the claim for indemnity under a contract of insurance except where the contravention is committed by the insured person… with the intent to bring about loss or damage” (emphasis mine).

36Section 447(2)(a.1) of the Insurance Act does not apply because it relates to misrepresentation relating to entitlement to a benefit under a contract of insurance. Whereas, the Applicant’s misrepresentations are related to procuring the contract of insurance, not entitlement to a benefit described in it.

In the Alternative, the Common Law of Michigan Excludes the Applicant from Receiving Any Benefits

37If I am wrong, and the disqualifying provisions in section 31(1) of the Schedule do not apply to the Applicant, he is nevertheless disqualified from receiving benefits pursuant to the conditions outlined in Michigan’s common law.

38Recall, pursuant to section 280(3) of the Insurance Act, the parties are unable to bring a proceeding in any court with respect to a dispute described in section 280(1). Thus, the parties are forced to bring their dispute to the Tribunal. In the event that the disqualifying provisions in section 31(1) of the Schedule are unapplicable, section 59(2)2 provides that the Applicant would be subject to the “same conditions” as if he were entitled to benefits as if he were a resident of the jurisdiction where the accident occurred. Thus, it follows that the Tribunal ought to apply the Michigan common law principles, pursuant section 59(2)2 of the Schedule because the common law principles are “conditions” to the insurance contract.

39Section 59(2) of the Schedule provides the Applicant with the option to elect benefits pursuant to the Michigan law. Section 59(2)2 specifies that the Applicant is entitled to elect “(b)enefits in the same amounts and subject to the same conditions as if (he) was a resident of (Michigan) and was entitled to payments under the law of (Michigan)” (emphasis mine). Michigan’s common law imposes certain conditions on the Applicant’s entitlement to the benefits, including that his entitlement is rescinded if it is determined that the Applicant wilfully misrepresented in the application for automobile insurance.

40The Respondent is permitted to rescind the entire policy and seek repayment under the tort of unjust enrichment if the common law principles of rescission in Michigan are applied. The two witnesses at this hearing are practicing attorneys and law school professors. Both witnesses agreed that an auto insurance policy, including one provided pursuant to a no-fault benefit scheme, may be rescinded ab initio in the event that the policy was procured by way of material misrepresentation, such as the omissions committed by the Applicant. Thus, the Applicant would not be entitled to any benefits and the Respondent would be permitted to seek repayment of all amounts paid, under the common law.

41Stephen Sinas, the Applicant’s witness, never addressed the common law of material misrepresentation. To him, material misrepresentation is not at issue because his interpretation of the Schedule provides that the Applicant’s ability to claim benefits pursuant to Michigan’s WLBs is independent of whether the Applicant is entitled to WLBs under Michigan law. The reason for this, according to the witness, is that section 59(2)2 of the Schedule provides entitlement to WLBs “as if the (Applicant) was a resident of the (Michigan)… and was entitled to payments under the law of (Michigan)”. He stresses that the use of the term “as if” implies that the Applicant need not be entitled to Michigan benefits to receive the WLBs he claims. He further explains that the law of misrepresentation and rescission are not codified in Michigan law but, instead, established through the common law. Thus, there are no “conditions” pertaining to misrepresentation and rescission which apply to the Applicant’s benefits which would disqualify him from receiving a benefit, such as WLBs, as a result of material misrepresentation.

42The affidavit of Michelle Thurber-Czapski, the Respondent’s witness, outlines the common law application of rescission of a no-fault insurance contract. As noted earlier, Michigan law is more punitive than the Schedule in instances of material misrepresentation. In situations where material misrepresentation occurs, the insurer is permitted to cancel the entire policy ab initio, from the beginning, with the effect of disentitling the injured person from all benefits, including medical, rehabilitation, and attendant care benefits.

43I prefer the opinion and approach of Michelle Thurber-Czapski over Stephan Sinas. I find that Mr. Sinas applies the term “condition” too narrowly by excluding the common law conditions that the contract for no-fault insurance is subject to. The Schedule provides no limit on what the conditions are or where the conditions must originate from. Thus, I find that, if the disqualifying provisions in section 31(1) of the Schedule do not apply to the Applicant, it is an error to disregard common law conditions when applying section 59(2)2 and prefer the opinion of the Ms. Thurber-Czapski. Mr. Sinas largely agreed with Ms. Thurber-Czapski’s account of the common law of Michigan regarding misrepresentation and rescission. Considering the agreement, I used the Respondent’s witness’ affidavit as a guide with respect to the Michigan common law of misrepresentation and rescission.

44Bazzi v. Sentinel Ins. Co., 502 Mich 390, 401 (2018), affirmed in Munson Medical Center v. Falls Lake National Insurance Company (Mich. Ct. Appl. October 21, 2021)(unpublished), notes that it is well-settled law of the state of Michigan that where an insured person makes a material misrepresentation in the application for insurance, including no-fault insurance, the insurer is entitled to rescind the policy and declare it void from the beginning. Applying Bazzi to the Applicant’s case, it follows that a material misrepresentation would have the affect of voiding his policy from the beginning, as if it never occurred – providing him with no entitlement or coverage for his accident-related injuries.

45According to Meemic Ins Co v. Fortson, 506 Mich 287, 306 n 13;954 NW2d 115 (2020) (quoting Black’s Law Dictionary (10th ed)), the six factors to establish fraudulent misrepresentation are:1) a material representation was made 2) the representation was false 3) the maker of the representation knew it was false, or made it recklessly, without any knowledge of its truth 4) the misrepresentation was made with the intention that it should be acted upon by the other party 5) the other party acted in reliance upon it and 6) the other party thereby suffered injury.

46The Applicant meets the six factors in Meemic. He made a material misrepresentation when he failed to disclose his prior cancelled policy and prior at-fault accident. The failure to disclose the information provided false information to the Respondent. The Applicant was in an at fault accident the day prior to his application and reports no medical condition or other reason to explain why or how he did not know about the accident the day prior. The only reason to deny the information for the Respondent to omit the risk when calculating the cost of the Applicant’s policy. The Applicant’s misrepresentation had the intention that it should be acted on by the Respondent and the Respondent suffered an injury as a result. The misrepresentations were made in the Application for Automobile Insurance, a standard form which insurer’s use to assess risk and calculate insurance premium rates. The Applicant caused the Respondent to underestimate its risk due to his misrepresentations, with the end result being that the Respondent offered a contract of insurance with undervalued premium rates. The Respondent suffered an injury by engaging in a contract for insurance at undervalued rates.

47Considering the common law of the state of Michigan and in the event that the disqualifying provisions in section 31(1)(b) of the Schedule are not applicable, I find that the Applicant is barred from collecting WLBs because of the material misrepresentations made in his Application for Automobile Insurance.

Is the Applicant Liable to Repay IRBs to the Respondent?

48I find that the Respondent is entitled to a repayment of the IRBs paid to-date.

49Having determined that the Respondent is permitted to terminate the Applicant’s IRBs pursuant to section 31(1)(b), it follows that the Respondent is permitted to seek repayment of the IRBs paid, pursuant to section 52 of the Schedule.

50Section 52(1)(b) provides that a person is liable to repay an insurer any IRBs that is paid to them in the event they are disqualified from receiving the benefit pursuant to section 31. Having found that the Respondent rightfully terminated the Applicant’s IRBs, it follows that it is also entitled to seek repayment of those benefits paid.

51To claim repayment, the Respondent must notify the Applicant of the amount he is required to repay, pursuant to section 52(2)(a). The time provision in section 52(3) does not apply in the Applicant’s situation, as he is disentitled from receiving IRBs due to a material misrepresentation.

52I find that the Respondent is entitled to a repayment of benefits because it satisfied the criteria in section 52 of the Schedule by way of letter dated November 14, 2019, delivered via registered mail, (“the Notice”). The Notice advised that the Respondent became aware that the Applicant was involved in an at fault collision the day before the date of the Application for Automobile Insurance and characterized the omission as a material misrepresentation. It also advised that it became aware that the Applicant had an insurance policy cancelled within the three years prior to the application. The Notice refers to section 31(1)(b) of the Schedule, requests that the Applicant repay $72,881.74 in IRBs paid to-date and advised that interest may be charged on overdue payments. Additionally, the Notice stipulates that the Respondent is willing to discuss any reasonable repayment plan if the Applicant is unable to make the repayment as required.

53Considering the above, I find that the Respondent has satisfied the notice criteria is section 52 of the Schedule. As a result, the Applicant is liable to repay the Respondent the amount of $72,881.74.

54Having found that the Respondent is entitled to a repayment of benefits paid, it follows that it is entitled to interest on the repayment of benefits pursuant to section 52(5) of the Schedule.

CONCLUSION AND ORDER

55I find that the Applicant excluded from receiving IRBs pursuant to section 31(1)(b) of the Schedule, because of material misrepresentations made in his insurance application.

56I find that the Respondent is entitled to a repayment of IRBs paid to the Applicant in the amount of $72,881.74, pursuant to section 52(1)(a) because it paid IRBs to the Applicant as a result of wilful misrepresentation.

57The Respondent is entitled to interest pursuant to section 52(5) of the Schedule.

Footnotes

1. 1Letter from the respondent to the Applicant, dated November 14, 2019
2. 22018 CanLII 141004 (ONLAT)