Citation: Sonnet Insurance Company v. Crooks, 2023 ONLAT 20-011866/AABS

Licence Appeal Tribunal File Number: 20-011866/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:

Sonnet Insurance Company

Applicant

and

George Crooks

Respondent

DECISION

ADJUDICATOR:

Derek Grant

APPEARANCES:

For the Applicant:

Hermina Nuric, Counsel

For the Respondent:

George Crooks, Respondent

HEARD:

By way of written submissions

OVERVIEW

1George Crooks (“G.C.”), was involved in an incident on March 21, 2019, and sought benefits from Sonnet, pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (including amendments effective June 1, 2016). Sonnet disagrees that G.C. was involved in an “accident” and filed an application to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”) for resolution of the dispute.

ISSUES IN DISPUTE

2The issues to be decided in the hearing are:

a. Is Sonnet entitled to a repayment of all benefits paid to G.C. to date, pursuant to s. 52 and s. 53 of the Schedule, in the total principal amount of $8,909.00?

b. Is Sonnet entitled to interest for the overdue repayment of benefits?

RESULT

3I find that G.C. was not involved in an “accident” as defined by s. 3(1) of the Schedule. As a result, he is not entitled to claim accident benefits under the Schedule. Further, I find that G.C. wilfully misrepresented material facts relating to the incident. As such, I find that Sonnet is entitled to repayment in the amount of $200.00 for accident benefits paid to date, with the balance not being accident benefits that are eligible for repayment under s. 52 of the Schedule. Sonnet may charge interest on the $200 in accordance with s. 52(5) of the Schedule.

BACKGROUND

4Sonnet filed an application, and a case conference was conducted on April 15, 2021. G.C. did not appear for the case conference. Sonnet agreed to adjourn the case conference to allow G.C. an opportunity to be heard.

5A second case conference was held on June 25, 2021. Again, G.C. did not appear. As Sonnet appeared at the case conference and G.C. did not, a hearing date was set in order for G.C. to make his position known by way of submissions.

6Sonnet investigated whether the accident had occurred as described by G.C. because it had identified inconsistent reporting regarding the time of loss, passenger location, passenger relationship, loss details and the purpose of the trip that led to the incident.

7Sonnet commissioned a reconstruction report and on October 23, 2019, Kodsi Engineering concluded that the evidence was not consistent with the reported sequences. The evidence indicated that one of the vehicles was turned off at the time that another vehicle struck it in a t-bone type impact. The Kodsi Engineering report confirmed with G.C.’s admission that the incident was staged to look like an accident.

8G.C. has not participated in either of the case conferences. He has not provided a response to Sonnet’s application, nor has he provided responding submissions.

9Section 7(2) of the Statutory Powers Procedure Act (“SPPA”) allows this Tribunal to proceed with a scheduled written hearing in the absence of a party if it is satisfied that the absent party was given proper notice of the written hearing. In reviewing the Tribunal’s file, I find that G.C. was served notice, by way of regular mail, of the case conferences and the written hearing. Therefore, in accordance with s. 7(2) of the SPPA, G.C. is not entitled to any further notice in the proceeding.

10For the above reasons, I am satisfied with proceeding with the written hearing.

ANALYSIS

Was G.C. involved in an accident?

11Section 3(1) of the Schedule provides the meaning of an “accident”:

“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.

12The onus is on G.C. to establish that he was involved in an accident. I find he has failed to meet his onus.

13On the evidence, G.C. admitted at the Examination Under Oath (EUO) that the incident was staged. While I appreciate that G.C.’s admission is hearsay, s. 15 of the SPPA allows me to admit and consider any evidence that is relevant to the subject-matter of the proceeding; the EUO testimony is relevant to this matter. Further, I am satisfied that G.C.’s admission is reliable because an EUO is conducted with sworn testimony and G.C. made a statement against his own interest. Next, the report from Kodsi Engineering confirms that the incident was staged, and not as initially reported by G.C. I find such evidence persuasive and assign full weight to G.C.’s admission and the forensic report.

14Section 118 of the Insurance Act, RSO 1990, c. I.8 essentially states that a person shall not profit under an insurance policy from that person’s intentional or criminal act. This is a codification of public policy that persons who do not commit an intentional act causing death, injury or damage are the only ones who may claim an insurance policy’s benefits. A staged accident is contrary to such public policy.

15Accordingly, I find that G.C. was not involved in an accident.

Did G.C. commit wilful misrepresentation and fraud?

16Section 52 of the Schedule governs the repayment of benefits. Under s. 52(1)(a), a person is liable to repay to the insurer any benefit 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. Sections 52(2) and (3) provide timelines for repayment requests 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 within 12 months after the payment of the amount that is to be repaid unless it was originally paid to the person as a result of wilful misrepresentation or fraud. Sonnet bears the burden of proving that the benefits were paid to G.C. as a result of wilful misrepresentation or fraud, on a balance of probabilities.

17The Tribunal has adopted the Black’s Law Dictionary definition of “misrepresentation” as “any manifestation of words or other conduct by one person to another that, under the circumstances, amounts to an assertion not in accordance with the facts.”¹ In addition, the Tribunal has also held that remaining silent or failing to report can constitute wilful misrepresentation.² I agree with this interpretation and apply it here.

18On the evidence, I agree with Sonnet that G.C. wilfully misrepresented his claim of being involved in an accident for the purpose of claiming benefits.

19On July 25, 2019, G.C. underwent an Examination Under Oath and admitted that the incident was staged, stating at lines 682 and 683:

Q. So Mr. Crooks, we’ve had a little conversation off the records. Perhaps you can tell me what you’d like to say at this point.

A. At this point I would like to say that the crash was caused deliberately and the three other people that I said was in the car weren’t in the car. And it was kind of staged.

Q. Yeah. And who – and – and the other party that was in the accident, Mustafa Emad, he knew about that too?

A. He – I believe he set it up.

20I find that not only did G.C. wilfully misrepresent the details of the incident, but he further described the purpose of it at the Examination Under Oath, stating at line 688:

Q. So this may sound like a dumb question but why did you do it then if you didn’t get paid?

A. Well, I’d get – I was told if I went through with it then that maybe, like, at the end I could get a settlement after, like, six months or eight months.

21In my view, G.C.’s statements confirm his wilful misrepresentation in claiming to having been involved in a legitimate accident, and his fraudulent actions in claiming entitlement to and receiving benefits he did not qualify for (by way of completion of an Application for Accident Benefits). Further, in the absence of any submissions from G.C. refuting any of Sonnet’s claims, it is difficult to find how his conduct, and refusal to participate in the dispute resolution process, does not amount “to an assertion not in accordance with the facts.” The fact that G.C. made claims and received benefits from Sonnet, while knowing that he was not entitled, not advising Sonnet of same, for the purpose of “getting a settlement”, is clear wilful misrepresentation.

22As a result of G.C.’s silence, I draw an adverse inference against him for his wilful misrepresentation, for his failure to attend case conferences and his failure to engage in the hearing process to dispute Sonnet’s claims against him. In accordance with s. 52(1)(a), a person is liable to repay to the insurer any benefit that is “paid to the person” as a result of wilful misrepresentation, provided proper notice is given.

Did Sonnet provide proper notice?

23I find Sonnet’s notice of request for repayment meets the requirement to support its claim. Having found that G.C.’s Application for Accident Benefits was submitted under fraudulent pretences, Sonnet is not required to give 12 months notice, in accordance with s. 52(3) of the Schedule.

Is Sonnet entitled to a repayment of accident benefits?

24I find that Sonnet is entitled to repayment, as a result of G.C.’s wilful misrepresentation in his application for accident benefits.

25In the January 15, 2020 and March 24, 2020 notices, Sonnet indicated that it was seeking repayment in the amount of $8,909.00 which represents $200.00 for the cost of form completion, as well as “investigative fees” consisting of investigation expenses for $3,935.00, $3,005.80 in surveillance fees, $1,380.63 for a forensic reconstruction report, and $387.57 for medical records and transportation.

26Sonnet acknowledges that the “investigative fees” of which they are requesting repayment are not considered “benefits” as defined by s. 50(3)(e) of the Schedule. However, its position is that the intention of the Schedule was not to exclude from the sphere of “benefits” the costs that are incurred in the course of claims handling, such as investigation fees.

27Sonnet posits that the inclusion of insurer examination expenses under s. 50 creates ambiguity regarding the meaning of the word “benefit” in the Schedule. It submits that including the claimed investigation fees within the meaning of the word “benefit” with s. 52 of the Schedule is consistent with the objective of the legislation. I disagree.

28Section 50 of the Schedule requires an explanation of benefits (EOB) to be provided to an insured, detailing the type of benefit, the amount of the benefit, and how that amount was determined. Section 50(3) goes into greater detail such as the amount that has been paid up to the date of the EOB and the amounts remaining for the various types of benefits, such as medical/rehabilitation benefits and attendant care benefits. Section 50(3)(e), on which the respondent relies, states that the EOB provided to the insured shall detail the amount paid by the insurer in respect of section 44 examinations up to the date of the EOB.

29A crucial difficulty that Sonnet faces (and candidly concedes, as noted above) is that the investigative fees claimed in this dispute are not “benefits.” It follows that the investigative fees would not be detailed in the EOB provided to the insured. Even if investigative fees were included in such an EOB (which I am not persuaded has been or ever will be the case), Sonnet faces the greater difficulty that s. 52 of the Schedule limits repayment of amounts improperly paid to the insured to benefits.

30There is no provision under s. 52 of the Schedule that includes a repayment of fees that are part of the insurer’s undertaking to investigate an insured. A plain reading of s. 52(1) clearly shows that repayments are for any benefit under the Schedule, any income replacement benefit (IRB) or non-earner benefit (NEB) that was paid while the insured was disqualified by Part VII of the Schedule, or any IRB, NEB or caregiver benefit or any expense outlined in Part IV of the Schedule to the extent of their prescribed deductibility. None of the investigative fees claimed by Sonnet, e.g. investigation expenses, EUO legal fees, surveillance fees, a forensic reconstruction report or obtaining medical records and transportation, fall within the scope of s. 52(1). The only amount that falls within scope is the $200.00 for form completion and I find that Sonnet is entitled to repayment from G.C. in the amount of $200.00. Consequently, Sonnet may charge interest on the $200.00 to be repaid in accordance with s. 52(5) of the Schedule.

COSTS

31Under Rule 19 of the Tribunal Rules where a party believes that another party has acted unreasonably, frivolously, vexatiously, or in bad faith within the proceeding (i.e., civility within the proceeding), that party may make a request to the Tribunal for costs. Costs are also discretionary, not mandatory.

32Sonnet submits that it is entitled to costs as a result of G.C.’s wilful misrepresentation and the fees it incurred as a result of having to commence and participate in the subject proceeding. Its position is that the maximum award should be levied for the purpose of deterring fraud. It further submits that where the investigative fees are not seen as a benefit subject to repayment under s. 52 of the Schedule, that the investigative fees ought to be paid as costs under Rule 19.

33Sonnet claims the maximum $3,000.00 ($1,000.00 per day) for its attendance at two case conferences and this hearing. The $1,000.00 represents the quantum limit placed on the Tribunal for each full day of attendance at a motion, case conference or hearing, in accordance with Rule 19.6 of the Tribunal Rules of Practice and Procedure.

34While I am sympathetic, I disagree with Sonnet’s position. Rule 19 does not apply in the place of a failed attempt to recoup repayment under the available provisions of the Schedule.

35While G.C.’s actions in filing an Accident Benefit Claim for Benefits, his deliberate intention of engaging in the fraudulent actions of staging the incident, his failure to participate in the case conferences, the subsequent hearing, forced Sonnet to incur expenses to obtain a decision to recoup some of its expenses, a cost remedy is not appropriate.

36Although G.C. did not attend the case conferences, or participate in the hearing, and I have found his application for benefits being fraudulent, this is separate and apart from him being vexatious, frivolous or acting in bad faith as it pertains to the proceeding, in accordance with Rule 19. Further, none of the scheduled events took up an entire day.

37For these reasons, I decline to make an order for costs.

ORDER

38G.C. was not involved in an “accident” as defined in s. 3(1) of the Schedule.

39G.C. engaged in wilful misrepresentation and fraud with respect to his application for accident benefits.

40G.C. is ordered to repay Sonnet the amount of $200.00 in accordance with s. 52(1)(a) of the Schedule.

41Sonnet is entitled to interest on all amounts owing in accordance with s. 52 of the Schedule.

42Sonnet is not entitled to costs.

Footnotes

1. 117-000272 v T.T., 2017 CanLII 87539 (ON LAT) at paras. 21-22.
2. 2Ibid. at para. 28