Intact Insurance Company v. Hashemi, 2023 CanLII 1443

Citation: Intact Insurance Company v. Hashemi, 2023 ONLAT 20-011873/AABS

Licence Appeal Tribunal File Number: 20-011873/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:

Intact Insurance Company

Applicant

and

Samim Hashemi

Respondent

DECISION AND ORDER

ADJUDICATOR: Stephanie Kepman

APPEARANCES:

For the Applicant: John P Desjardins, Counsel

For the Respondent: Samim Hashemi, Self-represented, did not participate

HEARD: By way of written hearing

REASONS FOR DECISION AND ORDER

BACKGROUND

1Samim Hashemi (“SH”) was involved in an automobile accident on April 15, 2017 and sought benefits pursuant to the Statutory Accident Benefits Schedule Effective - September 1, 2010 (including amendments effective June 1, 2016) (“Schedule”)¹. SH received accident-related benefits from Intact Insurance Company (“insurer”).

2Intact Insurance Company (“insurer”) subsequently submitted an application to the Licence Appeal Tribunal - Automobile Accident Benefits Service (“Tribunal”) related to the benefits it paid to SH.

ISSUES

3The issues for the Tribunal to decide are:

i. Is the insurer entitled to a repayment in the amount of $6,866.84 for the accident benefits it paid to SH from April 15, 2017, to date?

ii. Is the insurer entitled to a repayment in the amount of $3,003.35 for the examination expenses it incurred from April 15, 2017, to date?

iii. Is the insurer entitled to a repayment in the amount of $5,686.57 for other expenses it incurred from April 15, 2017, to date?

iv. Is the insurer entitled to interest on any overdue payment of benefits?

v. Is the insurer entitled to an award Is under s. 10 of O. Reg. 664?

vi. Is the insurer entitled to costs?

LAW

4Section 3(1) of the Schedule defines an accident as an incident in which the use or operation of an automobile directly causes an impairment or damage to prescription eyewear, dentures, hearing aids, prosthesis or other medical or dental device.

5Section 52(1)(a) of the Schedule states that a person is liable to repay an insurer if any benefit described in the Schedule is paid to a person as a result of an error on the part of the insurer, the insured person or any other person, or if it is as a result of wilful representation or fraud.

6Section 52(2) of the Schedule states that if a person is liable to repay an amount to an insurer, the insurer shall give the person notice of the amount that is required to be repaid and, if the person is receiving an income replacement or caregiver benefit, give the person notice that the insurer intends to collect the amount by reducing each subsequent payment of the benefit by up to 20 percent of the amount otherwise paid.

7Section 52(3) of the Schedule states that if the notice under section 52(2) of the Schedule is not given within 12 months after the payment of the amount is to be repaid, the person to whom the notice would have been given stops being liable to repay the amount unless that amount was originally paid to the person as a result of wilful misrepresentation or fraud.

8Section 52(5) of the Schedule states that an insurer may charge interest on the outstanding balance of the amount to be repaid for the period, starting on the 15th day after the notice is given under section 52(2) of the Schedule, and ending on the day repayment is received in full, calculated at the bank rate in effect on the 15th day after the notice under section 52(2) of the Schedule was given.

9Section 53 of the Schedule states that an insurer may terminate the payment of benefits to or on behalf of an insured person if the insured person has wilfully misrepresented material facts with respect to the application for the benefit and if the insurer provides the insured person with a notice setting out the reasons for the termination.

10Rule 19 of the Licence Appeal Tribunal, Animal Care Review Board, and Fire Safety Commission Common Rules of Practice and Procedure – October 2, 2017, as amended (“Rules”) provides parties a way to request costs should they believe another party in a proceeding has acted unreasonably, frivolously, vexatiously or in bad faith.

11Section 10 of R.R.O. 1990, Regulation 664, Automobile Insurance states that if the Tribunal finds that an insurer has unreasonably withheld or delayed payments, the Tribunal, in addition to awarding the benefits and interest to the insured person, may award a lump sum of up to fifty percent of the amount to which the insured person was entitled to at the time of the award, with interest, on all amounts owing to the insured person

12The insurer paid SH medical benefits in relation to the to the above-mentioned accident.

13The insurer submitted that after providing SH with payment for his accident-related benefits, it determined that the applicant’s alleged accident did not fall within the definition of such based-on section 3(1) of the Schedule.

14The insurer is now seeking repayment for said benefits and interest and submitted an application the Tribunal for same and argued that SH was involved in a “scheme to stage an accident”.

15The insurer took the position that the applicant, as a result of his wilful misrepresentation, is not entitled to accident benefits.

16A case conference was held², and SH did not attend or participate. A written hearing was scheduled at the case conference.

17The insurer made its written submissions to the Tribunal on January 7, 2022, pursuant to the Case Conference Report and Order.

18SH was ordered to make his submissions no later than January 21, 2022. The Tribunal did not receive any submissions from SH.

19The Tribunal attempted to contact SH on August 31, 2022, via couriered letter³ to remind him of his obligation to make submissions, lest the hearing occur without this participation. SH was given until September 16, 2022, to provide submissions.

20SH did not respond to this communication, and the Tribunal proceeded with the written hearing without his participation, pursuant to section 7 of the Statutory Powers Procedure Act⁴.

21Upon reviewing the insurer’s submissions, it addressed the following: the medical benefits in the amount of $3,291.23; $3,575.61 for medical examinations; $5,686.57 for other expenses incurred; interest; costs; and an award.

Wilful Misrepresetation

22The insurer argued that SH alleged he was in an accident and notified the insurer of this on April 21, 2017⁵. The insurer submitted it opened a claim for SH and provided medical benefits for treatment.

23Following this, the insurer hired an engineer⁶ to investigate the alleged accident. The engineer found that SH’s vehicle was in park or neutral at the time of the alleged accident and not in motion, the driver’s airbag of SH’s vehicle was disconnected before his alleged accident, and SH’s vehicle may have been involved in a prior, unreported accident⁷.

24The insurer also conducted an examination under oath (“EUO”) of SH to obtain more information for its investigation. The insurer submitted that SH admitted that his alleged accident was fraudulent, and as a result, his counsel withdrew her representation⁸.

25The insurer drew my attention to the fact SH’s counsel at the time wrote: “it has come to our attention that Mr. Hashemi falsely reported the above subject accident which occurred on April 15, 2017⁹”.

26Based on all of the above, the insurer took the position that SH’s alleged accident did not occur as reported and that SH wilfully misrepresented facts and intentionally gave false and misleading statements to obtain benefits under the Schedule.

27The insurer denied SH’s accident benefits claim and terminated payments based on section 53 of the Schedule, as the insurer had found that SH was not involved in an accident pursuant to the Schedule. The insurer also informed SH that it would be seeking repayment for all benefits paid in relation to his alleged accident¹⁰.

28The insurer sent another letter to SH¹¹, approximately one year later, again, requesting repayment based on section 52 of the Schedule, and requesting that SH repay $6,866.84 for medical benefits and expenses the insurer had paid SH.

29The insurer argued that SH had not made any repayment attempts.

30As mentioned above, SH did not make any submissions.

31After considering the submissions of the insurer, based on a balance of probabilities, I accepted that incident involving SH was not an accident pursuant to section 3(1) of the Schedule.

32After reviewing the evidence relied upon by the insurer, including the engineering report and the letter from SH’s former counsel, I found them to be persuasive that SH did wilfully misrepresent his injuries in order to obtain accident benefits and that his injuries did not occur as a result of his alleged accident.

33As I have found that SH made wilful misrepresentations, I must now consider if the insurer is entitled to repayment of the benefits paid.

REPAYMENT OF BENEFITS

Is the respondent entitled to repayments of $3,291.23 for benefits and $3,575.61 for Insurers’ Examinations?

34The insurer submitted it is entitled to a repayment in the amount of $3,291.23 for treatment provided for the following treatments:

August 10, 2017: $ 112.81

September 26, 2017: $2,115.00

September 26, 2017: $ 85.00

February 10, 2018: $ 978.42

Total: $3,291.23

35The insurer also sought repayment for its insurer examinations (“IE” s) in the amount $3,757.61¹² with HVE Healthcare Assessments based on the following breakdown:

$261.31 – Medical reports – issued 29/11/2017

$1,208.97 – Medical reports – issued 01/03/2018

$211.88 – Medical reports – issued on 30/03/2018

$211.88 – Medical reports – issued on 29/08/2018

$1,682.57 – Medical reports – issued on 30/01/2019

Total $3,757.61

36The insurer submitted that based on section 52(1) of the Schedule, it is entitled to repayment of the benefits and the IEs from SH due to SH’s wilful misrepresentation “to make it whole”, meaning to repay the respondent for the applicant’s fraudulent conduct.

37The applicant insurer also submitted that as it complied with section 52(2)(a) of the Schedule, via its formal repayment request to SH, gave him notice, requested the payments of $3,291.23 for benefits and $3,575.61 for IEs. The communication also stated that based on section 52(5), interest would be charged 15 days after the notice was given and ending when the applicant repaid the amount owing.

38The insurer submitted pursuant to section 52(3) of the Schedule, the insurer paid benefits to SH based on wilful misrepresentation, therefore the insurer was not required to notify SH within 12 months and SH remains liable to repay the amount owing to the insurer.

39SH did not make any submissions, as noted above.

40After considering the submissions and evidence of the insurer, based on a balance of probabilities, I find that SH is required to pay back the insurer $3,291.23 with respect to benefits paid to him as a result of his wilful misrepresentation.

41I agreed with the insurer’s submissions with respect to its compliance with section 52 of the Schedule. As I have found that SH wilfully misrepresented his accident, the insurer is not subject to the notification period of 12 months, and therefore, I find its notice valid. I also agree that this notice complied with subsections 52(2) and (5) of the Schedule, and therefore, SH is ordered to repay this amount plus interest.

42However, with respect to the insurer’s IEs, upon my review of section 52 of the Schedule, I did not see any grounds for an insurance company to reclaim IE expenses. I noted that section 52(1) of the Schedule allows insurance companies to reclaim:

“any benefit…., any income replacement or non-earner benefit…,… or caregiver benefit..”.

43I disagreed with the insurer’s position with respect to repayment for IEs, as I find that IEs are not benefits pursuant to the Schedule. Nowhere in section 52 are IE expenses captured or addressed, and therefore, I find no basis for the insurer to claim them. I also noted that the insurer did not provide me with any case law to support its position. Therefore, the respondent is not entitled to a repayment in the amount of $3,757.61 for its IEs.

$5,686.57 for other expenses incurred

44The insurer also sought repayment in the amount of $5,686.77 for expenses related to adjusting SH’s claim for an income replacement benefit (“IRB”).

45The insurer submitted that it hired Binder Dijker Otte¹³ - BDO Canada LLP (“BDO”) to assess SH’s IRB claim. The insurer argued that it paid BDO $706.25 for accounting services¹⁴.

46The insurer then hired the law firm of Zarek Taylor Grossman Hanrahan (“ZTGH”) to conduct an examination under oath (“EUO”) of SH. The insurer submitted it paid ZTGH the amount of $4,980.32 for the EUO¹⁵.

47The insurer submitted that similar to its arguments in relation to the IEs, the EUO and IRB accounting amounts ought not to have been paid by the insurer. The respondent also submitted that based on SH’s wilful misrepresentation, it should be entitled to payment from SH to “make it whole”.

48The insurer argued that it had no alternative but to seek remedy from the Tribunal for the damages caused by SH.

49The insurer also argued that section 280(6) of the Insurance Act recognizes the limits of providing the Tribunal exclusive jurisdiction on accident-benefit matters. To this point, the respondent submitted it understood that parties must apply to the Tribunal to request payment for accident benefits and related damages. The respondent submitted that based on this, the only jurisdiction it may seek repayment from is the Tribunal, therefore, the Tribunal must order SH to repay the insurer for his fraudulent expenses.

50The insurer also argued that section 280(6) of the Insurance Act specifically allows: “orders, including interim orders, to pay amounts even if those amounts are not costs or amounts to which a party is entitled under the Statutory Accident Benefits Schedule”.

51The insurer argued that based on section 280(6) of the Insurance Act, the Tribunal ought to order repayment of $5,686.57 for its expenses incurred because of SH’s wilful misrepresentation, meaning $706.25 for accounting services with BDO and $4,980.32 for conducting the EUO

52After considering the submissions and evidence, based on a balance of probabilities, I find that insurer is not entitled to a repayment from SH for the IRB account expenses and the costs associated with the EUO.

53The insurer did not provide persuasive arguments that the Schedule permits this type of recovery of expenses, but also provided no case law to support this position. Therefore, I find the insurer is not entitled to repayment from SH for these expenses.

54In terms of section 280(6) of the Insurance Act, I find that the legislation does not explicitly address an insurance company’s ability to reclaim expenses incurred on account of adjusting a claim. I also declined to exercise my discretion to do so. Though I appreciated the applicant’s arguments with regard to section 280(6)2 of the Insurance Act, without persuasive or binding case law, that addresses this issue. Since this was not the case, I saw this request as punitive to SH and therefore, do not accept it.

interest and award

55The insurer submitted that it was entitled to interest on the issues in dispute based on section 52(5) of the Schedule.

56The insurer argued that the letter it provided SH¹⁶ complied with the Schedule, as it notified SH that the insurer would charge interest on the balance owing starting 15 days after it provided notice.

57SH did not make submissions.

58After considering the submissions and evidence of the insurer, based on a balance of probabilities, I find that the insurer is entitled to interest on the outstanding benefits in dispute pursuant to section 52(5) of the Schedule.

59I agreed with the insurer’s submissions, namely that it complied with section 52(5) of the Schedule, and therefore, is entitled to interest.

60The insurer also requested the Tribunal order SH to pay it a special award. The insurer submitted that the purpose of section 10 is to “punish” an insurance company when it unreasonably fails to pay benefits promptly and deter future non-compliance¹⁷.

61The insurer submitted that the insured person, SH, should be subject to an award pursuant to section 10 due to his willful misrepresentation. The insurer argued that SH acted unreasonably and in bad faith and caused the insurer to spend significant amounts of money adjusting SH’s claim.

62The insurer also submitted that ordering SH to pay an award due to his wilful misrepresentation would have a deterrent effect to help stop parties from making fraudulent or wilful misrepresentations in the future. Therefore, the insurer ought to be entitled to a section 10 award.

63After considering the submissions and evidence of the insurer, based on a balance of probabilities, I find that the insurer is not entitled to a special award.

64Though I appreciated the insurer’s novel argument, this argument was not supported by section 10 itself, which, upon my review, contains no language to allow an insurance company to pursue an award from the Tribunal. As noted by the insurer, the purpose of section 10 is to address insurance companies that unreasonably withhold or unduly delay benefits to insured people and not vice versa.

65Moreover, though this argument was unique, it was not supported by the wording of section 10 of Regulation 664 or any case law and therefore, is not persuasive. Therefore, the insurer is not entitled to a special award.

COSTS

66The insurer also sought to recover costs from SH in relation to its legal expenses related to its application before the Tribunal for repayment. This request was made in compliance with Rule 19.4. The insurer submitted that it retained Regan Desjardin LLP to represent it at this hearing and paid the firm $11,082.53 ¹⁸.

67The insurer submitted that it would be entitled to costs should it move forward with a court application against SH¹⁹ and therefore, sought costs from the Tribunal. To support this position, the insurer relied on section 280(6) of the Insurance Act, as discussed above.

68The insurer also relied on the Tribunal’s Rules, specifically Rule 19.1, where it submitted that SH had acted in bad faith due to his wilful misrepresentation. The insurer submitted that as a result of SH’s wilful misrepresentation, it was forced to defend a claim against it that was made in bad faith, and should be allowed to reclaim the money it spent trying to adjust the “loss” of SH.

69The insurer also submitted that SH’s conduct detrimentally impacts all people insured in Ontario, and ultimately also impacts insurance companies but the public at large.

70As noted above, SH did not make any submissions on this issue.

71Costs are a discretionary remedy, which may be imposed when a party has acted unreasonably, frivolously, vexatiously, or in bad faith in a proceeding, pursuant to Rule 19.1 of the Rules. In considering the test for costs, the Tribunal may consider the seriousness of the misconduct, whether the conduct was in breach of any Tribunal orders, or whether the parties’ behaviour interfered with the Tribunal’s ability to carry out a fair, efficient, and effective process, prejudice to the other parties, and the potential chilling effect a cost award may have on individuals accessing the Tribunal system.

72After considering the submissions and evidence of the insurer, I find the respondent is not entitled to costs; though I agree that SH acted in bad faith due to my previous findings of willful misrepresentation, I find that SH’s willful misrepresentation occurred before the hearing and therefore, is not subject to Rule 19.1.

73However, I disagreed with the insurer’s interpretation of Rule 19, which serves the purpose of dissuading improper behaviour during a hearing, which was not the case in the subject matter.

74Moreover, costs at the Tribunal are not a way to recover expenses related to legal representation, and the Rules do not expressly permit this. I was left wondering why the insurer chose to retain counsel as opposed to using a paralegal or its in-house counsel.

75Moreover, the point of costs under Rule 19 is to discourage unreasonable, frivolous, vexatious and/or bad faith behaviour before the Tribunal and not to repay parties for wilful misrepresentations.

76Though I agreed that SH ought to have participated in the hearing, without more information regarding the reasons for his absence, I am not inclined to award costs. Without direct evidence with respect to SH’s alleged unreasonable, frivolous, vexatious or bad-faith actions during this proceeding, I will not award costs.

CONCLUSION and order

77The insurer is entitled to repayment of $3,291.23 for benefits it paid to SH.

78The insurer is not entitled to repayment for $3,757.61 for the Insurer’s Examinations

79The insurer is not entitled to repayment for $5,686.57 for other expenses it incurred.

80The insurer is entitled to interest on the benefit in the amount of $3,291.23 in accordance with section 52(5) of the Schedule.

81The insurer is not entitled to a special award.

82The insurer is not entitled to costs.

Footnotes

1. 1O. Reg. 34/10 as amended.
2. 2On June 14, 2021, based on the Case Conference Report and Order of Adjudicator Paul Gosio, dated June 14, 2021.
3. 3Letter from the Tribunal dated August 31, 2022.
4. 4Statutory Powers Procedure Act, R.S.O. 1990, c. S.22
5. 5Based on the affidavit of Rohan Blake, adjuster with Intact dated January 4, 2022.
6. 6Namely Michael Jenkins, professional engineer, of Impact Forensic Inc.
7. 7Based on the report of Mr. Jenkins dated August 7, 2018.
8. 8Based on the letter from Kathy Noohi, counsel dated April 11, 2018.
9. 9Ibid.
10. 10Based on a letter from the insurer to SH dated March 25, 2019.
11. 11Based on a letter from the insurer to SH, dated April 29, 2020.
12. 12Based on the Financial Transaction Summary provided by the insurer, undated.
13. 13Based on a letter from BDO to SH, dated December 13, 2017.
14. 14Based on the Financial Transaction Summary provided by the insurer, undated.
15. 15Ibid.
16. 16Based on the letter from the insurer to SH, dated April 29, 2020.
17. 17Based on S.K. v Aviva Insurance Canada, 2020 CanLII 43700 (ON LAT), at para. 53.
18. 18Based on the Financial Transaction Summary provided by the insurer, undated.
19. 19Based on Traders General Insurance Co. v. Kayes et al., 2020 ONSC 5991 at para 59.