The persistent problem of insurance fraud in the Greater Toronto Area is making headlines again, as a Toronto medical centre is facing a multi-million dollar suit from that province’s auto insurers.
Pacific Assessment Centre Inc., Fairview Assessment Centre Inc. and M.D. Consult Inc. (which operates as Toronto Regional Medical Assessment Centre), as well as several co-defendants, are being sued by The Dominion of Canada General Insurance Company.
A minimum of four other Ontario auto insurers and their subsidiaries have named Toronto-based Pacific and Fairview in lawsuits. The Dominion's lawsuit has a total of 14 named corporate and individual defendants.
The Dominion is seeking $500,000 in damages for alleged fraud, fraudulent misrepresentation, conspiracy and/or unjust enrichment, as well as $5 million in aggravated/or punitive damages.
Auto insurance fraud was identified as the largest source of savings for the industry, contributing to the 15 per cent premium reduction target set by Queen’s Park in August.
“The whole GTA area, we can probably ask them (brokerages) to afford this rate reduction,” says Karen Gavan, president and CEO of Economical. “And certainly when you have the cost reductions in place (anti-fraud measures), it will proportionally have more impact in that area of the GTA.”
But it is the disparity in fraud between the GTA and the rest of the province that will create a problem when those reduction targets are being met, adds Gavan. (continued.)
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“What I’m concerned with is someone in Timmins, or Thunder Bay or Sarnia is expecting to pay a rate decrease because of cost-saving measures. It is not going to reduce the cost there – and they are already getting a reasonable premium for the product they bought.”
Pacific, Fairview, and several other co-defendants were also sued by State Farm Mutual Automobile Insurance Company, the Co-operators General Insurance Company, Economical Mutual Insurance Company and Allstate Insurance Company of Canada. Those cases, like that of The Dominon, are still before the courts.
Court records indicate that State Farm, The Dominion and Co-operators alleged, among other things, that treatment plans, assessment requests and invoices that were submitted were "purported to have been signed by doctors who never worked at a corporate defendant and/or who never recommended the assistive devices allegedly recommended."
It is the sensational cases of fraud occurring in the Toronto area – coupled with the announced premium cuts by the politicians, that has drivers in Ontario expecting equal treatment when the 15 per cent premium reductions are handed out over the next two years, says Gavan. And that is what makes it more important than ever for brokers to reach out to clients and explain what exactly is happening in auto insurance.
“It sets false expectations among consumers across the province,” she says, “and so the more you talk to your clients, to explain those issues, the better. The more you can get out there, one on one, with consumers in your local areas, have an intelligent conversation, the more effective it will be. Because we don’t want that backlash. We want people to understand this.” (continued.)
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“We looked at our transit, we looked at our limitations, we factored in the metric from our 2010 forums, then we give some credence and weight to the things we think are on the horizon,” Tulloch observes, talking about Aviva Canada’s approach to factoring insurance premium forecasts. “But we never look at the political landscape, and say ‘these four or five territories are politically sensitive, and we have to adjust the rate.’ This is about fairness and this is about getting the right price for Ontarians.
“So, while I think we probably should be looking at that, it would be equally irresponsible.”
In a ruling released March 5, Madam Justice Beth Allen of the Ontario Superior Court of Justice denied the request by Pacific, Fairview and four individual defendants to strike out separate claims by The Dominion, Co-operators and State Farm. Justice Allen's ruling did not pertain to separate lawsuits alleging auto insurance fraud filed by Economical and Allstate.
Justice Allen had ordered The Dominion and Co-operators to amend their damage claims to include special damages for conspiracy. Co-operators had sought $2 million in damages and $5 million in aggravated and/or punitive damages. State Farm had sought $8 million in damages and $5 million in aggravated and/or punitive damages.
The six defendants sought leave to appeal Justice Allen's dismissal of their motion to strike The Dominion and The Co-operators' pleadings. (continued.)
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However, in a ruling released November 8, Madam Justice Harriet Sachs of Ontario Divisional Court dismissed the application for leave to appeal.
The defendants had argued that Justice Allen erred in March when applying the "doctrine of merger" in her ruling, but Justice Sachs disagreed.
The five defendants sued by Allstate were also sued by Economical, which alleged that several claims submitted under SABS were "represented... as including services and/or opinions" from several doctors who "were not, in fact, associated with the Corporate Defendants Fairview and Pacific and did not provide any of the services" indicated on the invoices.
Economical's allegations have not been proven and its lawsuit is still before the courts.
In a ruling released June 11, Mr. Justice Edward Morgan ordered Economical to provide "precise details" to Fairview on each allegation of fraud.
Economical had alleged that some defendants had obtained names and electronic signatures of various physicians who had no affiliation with the corporate defendants, and had affixed electronic signatures of those physicians to assessment reports, requests for assessment reports and treatment plans, when they were not authorized by those physicians to do so.
