Court File and Parties

CITATION: Brozmanova v. Tarshis, 2017 ONSC 6559

COURT FILE NO.: CV-17-573013

DATE: 2017-11-01

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Eva Brozmanova AND: Lorne Marvin Tarshis and Jennifer Brown

BEFORE: P. J. Monahan J.

COUNSEL: Richard Parker, for the Plaintiff Andrew Kalamut, for the Defendants

HEARD: October 17, 2017

Endorsement

[1] The Plaintiff, Eva Brozmanova, was employed by the Defendant, Dr. Lorne Tarshis, as an anesthetician and a receptionist at his medical clinic. While working at the clinic, Ms. Brozmanova underwent a number of cosmetic procedures that were performed by Dr. Tarshis.

[2] Ms. Brozmanova alleges that Dr. Tarshis improperly billed OHIP for medical services that he did not perform. She further claims that as a result of these claims having been submitted to OHIP, she has been unable to obtain travel insurance that will allow her to travel outside of the country. On April 17, 2017, she commenced an action against Dr. Tarshsis, as well as against Jennifer Brown, a former employee of the clinic (collectively, the “Defendants”), for fraud.

[3] The Defendants move to strike out the statement of claim (the “Claim”) on two grounds: (i) the Claim is statute-barred pursuant to the Limitations Act 2002, S.O. 2002, c.24, Sch. B (the “Limitations Act”); and (ii) the Claim discloses no reasonable cause of action.

Limitations Act

[4] The Defendants move under Rule 21.01(1)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to strike out the Claim on the basis that the action was commenced outside the applicable limitation period and therefore has no chance of success should the action proceed to trial.

[5] The test on a motion to strike under Rule 21.01 is whether, assuming the facts as stated in the claim to be true, it is “plain and obvious” that the pleadings disclose no reasonable cause of action, or that the action is certain to fail. Neither the length and complexity of the issues, the novelty of the cause of action, nor the potential of a strong defence, should prevent the plaintiff from proceeding. See Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959 at para. 21.

[6] Under s. 4 of the Limitations Act, a claim must be commenced within two years of its being discovered or discoverable, which involves knowledge of the following four basic elements:

a. That an injury, loss or damage has occurred;

b. That the injury loss or damage was caused by or contributed to by an act or omission;

c. That the act or omission was that of the person against whom the claim is made; and

d. That, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it: Limitations Act, ss. 5(1)(a)(i) to (iv).

[7] Proceeding on the basis that the facts as pleaded are true, the medical procedures giving rise to the Claim were performed by the Defendant Tarshis for Ms. Brozmanova between 2003 and 2008. Sometime in 2009, Ms. Brozmanova became aware that Dr. Tarshis had submitted claims to OHIP in respect of these procedures. At that time, Ms. Brozmanova had sustained a broken ankle (an event unrelated to Dr. Tarshis) and an insurance claim was submitted in respect of the injury. Ms. Brozmanova’s insurance company contacted her in order to obtain her medical history. Upon obtaining her medical history, she discovered that charges had been submitted to OHIP indicating that she had certain medical conditions. The insurance company claimed that the broken ankle was a result of the medical conditions referenced in her medical history.

[8] Ms. Brozmanova immediately contacted OHIP to complain that she did not have the conditions referenced in her medical history and asked that they be removed. OHIP agreed to amend her medical history by removing reference to these conditions.

[9] In April 2015, Ms. Brozmanova attempted to obtain medical insurance for travel outside of Canada. On April 20, 2015, she learned that OHIP had failed to remove the medical conditions from her record as had been promised in 2009. Further, OHIP indicated that they could not remove the reference to the medical conditions from her record since payments for the procedures in question had already been made.

[10] On April 17, 2017, Ms. Brozmanova commenced this action for fraud against the Defendants. The Claim states that Dr. Tarshis “fraudulently submitted claims to OHIP for treating these conditions and was paid for same by OHIP while knowing that he was committing fraud by doing so.” Although the precise nature of the “fraud” is not clearly identified, it appears to arise out of the fact that Ms. Brozmanova does not in fact manifest the conditions referenced on her medical history; that Dr. Tarshis is said to be unqualified to diagnose the conditions in question; that Dr. Tarshis had been paid privately by Ms. Brozmanova for the medical procedures and then sought payment from OHIP; and/or that Dr. Tarshis claimed reimbursement for procedures that were never in fact performed.

[11] The Defendants argue that, assuming for purposes of the motion that a fraud did occur, the Claim expressly pleads that Ms. Brozmanova discovered such fraud in 2009. At that time she was informed of the fact that OHIP had been billed for the procedures provided to her by Dr. Tarshis, and that certain medical conditions were now listed on her medical history. Therefore it is plain and obvious on the face of the Claim that it was not commenced within the two year time limit specified in the Limitations Act.

[12] Ms. Brozmanova argues that, although she was made aware in 2009 of the OHIP charges and the conditions identified on her medical history, she was not aware at that time that she had suffered any losses. She had been promised by OHIP that the medical conditions would be removed from her record and, in reliance on that representation, did not then take any legal action against Dr. Tarshsis. It was only on April 20, 2015 that she learned that OHIP had failed to remove the conditions from her medical history. She argues that the limitation period did not start to run until April 20, 2015, and that she commenced her Claim less than two years from that date.

[13] In my view, the Claim expressly pleads that Ms. Brozmanova was aware in 2009 of any alleged fraud committed by Dr. Tarshis. As the Claim states, she was made aware in 2009 that Dr. Tarshis had submitted claims to OHIP for reimbursement for procedures that had allegedly been performed for her benefit and that, as a result, certain medical conditions were identified on her medical record. She was further aware of the fact that the identification of these medical conditions on her record could impede her ability to obtain benefits or services, including insurance services. Indeed, the information regarding the claims submitted by Dr. Tarshis was brought to her attention in 2009 following an inquiry from her own insurance company. Thus, as Ms. Brozmanova pleads in her factum submitted on this motion, any fraud committed by Dr. Tarshis had ‘crystallized’ by 2009.

[14] Nor can Ms. Brozmanova’s reliance on OHIP’s representations regarding the removal of the conditions, or OHIP’s failure or inability to act on those representations, create, or recreate, a cause of action against Dr. Tarshis. Those representations were made by OHIP, not Dr. Tarshis. Nor does the timing of Ms. Brozmanova’s application for travel insurance create, or recreate, a cause of action against Dr. Tarshis. As Ms. Brozmanova pleads in her factum, any ‘loss’ resulting from Dr. Tarshis’ actions consisted of the listing of certain medical conditions on her medical history. This loss occurred at the time the claims for reimbursement were submitted to and paid by OHIP, and Ms. Brozmanova was aware of these facts in 2009.

[15] Therefore, all of the requirements of ss. 4 & 5 of the Limitations Act were satisfied in 2009, and the limitations period for any claim against Dr. Tarshis began to run as of that time. As the Claim was not commenced until April 17, 2017, it is plain and obvious that the Claim is out of time and cannot succeed. Accordingly, the action should be dismissed.

No Reasonable Cause of Action

[16] The Defendants also move under Rule 20.01(1)(b) to strike the Claim on the basis that it discloses no reasonable cause of action.

[17] The only cause of action that is pleaded is that of fraud. The requirements of civil fraud were set out by the Supreme Court of Canada in Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8, [2014] 1 S.C.R. 126 (“Bruno Appliance”) at para. 21 as follows:

a. There is a false representation by the defendant;

b. Some level of knowledge of the falsehood of the representation on the part of the defendant;

c. The false representation caused the defendant to act; and

d. The Plaintiff’s actions resulted in a loss.

All four of these elements must be satisfied in order to make out a claim for civil fraud.

[18] Here, the Claim does not plead that the Defendants made any representation to Ms. Brozmanova. The only representations by Dr. Tarshis that are referenced in the Claim are those he made to OHIP. Nor did Ms. Brozmanova act, or fail to take action, on the basis of representations made by Dr. Tarshis. This has the further consequence that Ms. Brozmanova cannot establish that she suffered an actionable loss resulting from Dr. Tarshis’ representations, since any such loss must flow from actions she took in reliance on his representations.

[19] The only representations made to Ms. Brozmanova were by OHIP. The Claim does state that she relied on those representations, and she claims to have suffered a loss from such reliance. But the Claim does not allege that OHIP’s representations are connected to, or attributable to, Dr. Tarshis. Thus she cannot rely on the representations made to her by OHIP in order to found a claim for fraud against Dr. Tarshis.

[20] In short, the Claim does not disclose any cause of action in fraud, since there is no claim that Ms. Brozmanova acted, or failed to act, on the basis of representations by Dr. Tarshis, with the further result that she cannot establish that she has suffered any actionable loss flowing from Dr. Tarshis’ representations. Therefore it is plain and obvious that the Claim fails to satisfy the third and fourth elements of civil fraud identified in Bruno Appliance.

[21] Since the only cause of action pleaded is that of civil fraud, the Claim fails to disclose any cause of action and should be struck.

Leave to Amend

[22] Ms. Brozmanova argues that, in the event I find that the Claim fails to disclose any reasonable cause of action, she should be granted leave to amend and plead alternative causes of action, such as breach of trust or breach of fiduciary duty. However any such alternative causes of action would be subject to the same limitations period applicable to the claim for civil fraud. Ms. Brozmanova would have been aware of the facts necessary to found any such alternative claims in 2009. Therefore any such alternative causes of action would also be out of time. It is therefore unnecessary to consider further the possibility of curing the defect in the pleadings through amendment.

Conclusion

[23] For these reasons the Claim should be struck, as it is plain and obvious that (i) it was commenced beyond the applicable limitation period; and (ii) it discloses no reasonable cause of action.

[24] With respect to costs, the Defendants submit that they should be entitled to costs on a substantial indemnity basis, since the Claim advanced unproven allegations of fraud against the Defendants. They argue that unproven allegations of fraud constitute “reprehensible, scandalous or outrageous conduct”, that tends to attract costs awards on a higher basis. See, i.e. Wilfert v. McCallum, 2017 ONSC 4431.

[25] I recognize that unproven allegations of fraud often attract awards on the higher scale. Yet, given the circumstances of the Plaintiff, as set out in her Claim, I do not find her conduct here to constitute “reprehensible, scandalous or outrageous conduct.” The Claim indicates that she has been impaired in her ability to secure travel insurance and cannot travel to visit family and friends in her retirement. In the circumstances, I do not believe that an award of costs on a substantial indemnity scale is warranted or appropriate.

[26] I have reviewed the Bill of Costs submitted by the Defendants and I find it reasonable in terms of the time spent and the expenses incurred. Accordingly, I fix the costs to be paid by the Plaintiff to the Defendants, on a partial indemnity scale, in the amount of $16,000, inclusive of disbursements and H.S.T., to be paid within 30 days.

P. J. Monahan J.

Date: November 1, 2017