Volume. 8 Issue. 31 – August 28, 2024
This week the Tribunal considers an insurer’s claim for repayment of $138K, based upon a contention that the MVA in question was staged. The insurer’s claim was based upon evidence from the Applicant’s now ex-wife, who had been a party to the incident, in addition to the corroborating evidence of the expert engineer.
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Staged MVA Results in $93K Repayment Order
A Woman Scorned – As a result of a July 2018 incident, Sonnet paid the Applicant Kallaa a total of $59,592.86 for Income replacement benefits, and $33,406.59 for medical and rehabilitation benefits. Sonnet had further incurred a total of $22,529.64 for the cost of independent examinations and medical documents, and $22,675.44 for investigation costs. In 23-002989 v Sonnet Insurance, Sonnet sought repayment of all payments described above, alleging that Kallaa was in fact not involved in a motor vehicle accident, but rather that the “accident” was staged.
Sonnet specifically submitted that the vehicle was not moving, and that “the respondent and his wife pushed the vehicle into the ditch, causing damage to the vehicle that is inconsistent with the damage reported and statements made by the respondent. She argues that the respondent’s friend damaged the vehicle with his tow truck by smashing the tow truck’s stinger into the vehicle’s rear end several times.” To this end, Sonnet relied on the transcript of examination under oath of the now ex-wife of Kallaa, the driver of the vehicle at the time of the alleged accident. This evidence was corroborated by the testimony of an expert in motor vehicle collision, reconstruction, and injury biomechanics.
It was Kallaa’s evidence that “he was the passenger and his wife at the time was the driver of the vehicle. He testified that they saw an animal in front of them and slowed down to avoid hitting the animal and in the process were rear-ended by another vehicle, which caused them to end up in a ditch. The driver of the vehicle that rear-ended them fled the scene and approximately one hour later the police arrived on the scene.” As for the evidence of his ex-wife, Kallaa indicated that she “has stated to him that she will ruin his life and that she made up the story that they pushed the vehicle into the ditch and had his friend damage the vehicle with his tow truck all in an effort to discredit him and continue to destroy his life.”
The Tribunal found that the version of events as depicted by the ex-wife was supported by the evidence of the expert reconstructionist. The combined evidence “satisfies me that the damage to the subject vehicle’s rear bumper is consistent with an impact by the stinger of a tow truck and is inconsistent with a rear-end collision involving another motor vehicle. I accept (the) opinion that the damage to the respondent’s vehicle was concentrated on a narrow band across the lower edge of the rear tailgate and that this is consistent with an impact by a tow truck stinger.” Further, it was found that “a collision that caused the damages to the respondent’s vehicle would have caused the vehicle to move forward in a straight line rather than rotating and into the ditch as alleged by the respondent.”
Accordingly, the evidence as a whole supports a finding that the accident was staged, and Kallaa “misrepresented that there had been an accident and that the applicant paid the benefits in dispute on the basis of that misrepresentation.” Sonnet “paid the respondent income replacement benefits in the sum of $59,592.86 as well as medical and rehabilitation benefits in the sum of $33,406.59 in error and as the result of the respondent’s misrepresentation. Therefore, the applicant is entitled to the repayment of those benefits.”
However, the Tribunal found that Sonnet was not entitled to $22,529.64 for the cost of independent examinations and medical documents, or $23,675.44 for the cost of the investigation. Counsel for Sonnet asked the Tribunal “to consider the applicability of s.50(3)(e) of the Schedule and LAT Rule 19 when considering awarding costs. It further submits that the consensus is that insurance rates be lowered and that people committing fraud contribute to the rise of automobile insurance premiums. The applicant argues that the intention of the Schedule was not to exclude from the sphere of benefits the costs that are incurred during claims handling, such as investigation fees. It also submits that inclusion of the insurer examinations expenses under s.50 of the Schedule creates ambiguity regarding the meaning of the word benefit in the Schedule.”
With respect to same, the Tribunal agreed “that insurance fraud can be a contributor to increased auto insurance rates, I find that the Schedule does not provide for the repayment of insurers’ examinations or medical documents or the repayment of the insurers’ investigative costs.” With respect to Sonnet’s further claim for a costs award, it was found that the “intent of Rule 19 would not be upheld if I were to award costs for the insurer’s investigative expenses. As the respondent did attend and participate in both the case conference and the hearing, I decline to order costs under Rule 19 as the respondent did not interfere with the Tribunal’s ability to carry out a fair, efficient process on this matter.”
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