Volume. 7 Issue. 2 – January 18, 2023
This week, we review two cases. In ‘Misrepresentation Warrants $72k Repayment’, the Tribunal finds that an Applicant’s material misrepresentations result in an obligation to repay in excess of $72,000 in disability benefits that had been received.
In ‘Insurer’s Behaviour Warrants Maximum Award’ the Tribunal considers the appropriate award to be levied against an insurer, whose behaviour fell “on the furthest end of the scale.”
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Misrepresentation Warrants $72K Repayment
Over $72K To Be Repaid – Injured in an April 2018 accident in Michigan, the Applicant Del Grosso, in 20-013318 v Intact, elected for and received benefits at the rates provided by Michigan statute. From April 2018 through to November 2019, Del Grosso received a total of $72,881.74 in disability benefits, referred to in Michigan as Work Loss Benefits, (“WLBs”). At that time, Intact wrote Del Grosso, terminating his disability benefits and seeking repayment of monies paid, as a result of a material misrepresentation made on his Application for Insurance.
The Tribunal noted it to be undisputed that Del Grosso failed to report pertinent information in the Application for Auto Insurance, dated March 15, 2017. This consisted of a confirmation both that Del Grosso had an auto insurance policy canceled 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.
The Tribunal confirmed that the omissions were material, as this history would result in either higher insurance premiums or a denial of coverage. The position of Del Grosso was essentially that Intact “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.”
The Tribunal however clarified that Del Grosso “received no benefits under Michigan law as he elected to collect benefits from his Ontario insurer at the rate pursuant to Michigan law…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”.
Found relevant to the matter was the fact of the intention of section 31(1)(b) of the Schedule being “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…”. The practical effect was to leave Del Grosso with predominantly medical and rehabilitation benefits only, thereby “maintaining the public policy of reducing the burden that accident victims place on the public healthcare system.” It was noted as well, that were Del Grosso correct in that Michigan statute prevailed, the end result would have been more punitive. Michigan law allows for the insurer being able to rescind ab initio the policy given the material misrepresentation, thereby disentitling Del Grosso from all benefits, including medical and rehabilitation.
The misrepresentation on the part of Del Grosso, “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.” As a result, Intact was entitled to a repayment of the $72,881.74 received in disability benefits.
Insurer’s Behaviour Warrants Maximum Award
50% Award Granted – Injured in a December 2019 accident, the Applicant Ni, in 20-008774 v Aviva, sought entitlement to IRB by way of submitting an OCF-2 and OCF-3 in January 2020. Aviva however, sought production of an additional eight items in accordance with s.33 prior to commencing IRB payments. Ultimately, IRB payments did not initiate until February 2021, with Aviva alleging that Ni’s payments were delayed due the failure of Ni to provide the various items sought under s.33 in a timely manner.
The Tribunal however found that Aviva “did not require the information listed above to determine whether the applicant was eligible for IRB as the respondent had already received the OCF-2 and the OCF-3. These are the only documents that the applicant is required to submit to the respondent so that the respondent can determine the quantum and eligibility for IRB.” Given the extensive delay in receiving IRB, Ni sought an award.
The Tribunal found that Aviva’s “conduct was imprudent, stubborn and inflexible as the respondent refused to pay the IRB after the applicant had submitted an OCF-2 on January 9, 2020 and an OCF-3 on January 16, 2020. For this applicant, these were the only documents that were required to initiate the IRB.”
It was noted that Ni was not self-employed and had but one source of income. Therefore, Aviva sought further documents “that were not required to prove the applicant was eligible for IRB.” As a result, Aviva was found liable to pay the maximum available award of 50% of the $23,314 in delayed IRB payments.
Aviva’s “behaviour falls on the furthest end of the scale” finding that Aviva ”insisted on receiving documentation that was not required to prove the applicant’s IRB eligibility, did not pay her IRB for over a year…even though she had sent the all the required documentation by January 16, 2020 and suspended her IRB payments on April 13, 2020 because of “non-compliance”. The applicant was compliant, however, as she had sent the respondent the required documentation by January 16, 2020 and attended three IEs to determine IRB eligibility that the respondent had scheduled in 2020 and in 2021.”
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