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Tag: Insurance Fraud

Producing False Witness To Collision Leads to $200,000 in Financial Consequences

In an illustration of BC’s motor vehicle insurance system having real teeth to punish fraudulent acts, reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, ordering substantial damages against a couple who produced a false witness to ICBC following a motor vehicle collision.
In this week’s case (ICBC v. Panag) the Defendant was involved in a 2006 collision.  The parties had competing versions of how the collision occurred.  The Defendant produced a witness in support of her claim.  After investigation ICBC determined this individual in fact did not witness the collision and was known to the Defendant.
ICBC paid out over $188,000 in claims following the crash.  ICBC held the Defendant in breach of insurance and sued to recover this money on the basis that the Defendant attempted to commit insurance fraud.  Mr. Justice Grauer agreed and ordered repayment of these damages along with punitive damages.  In reaching this decision the Court provided the following reasons:
64]         In these circumstances I am satisfied that the Panags and Harinder Grewal were in fact involved in a conspiracy to put forward Mr. Grewal to ICBC as a witness to the collision knowing that he had not in fact witnessed it, and with the intention that he provide ICBC with evidence that he did not have and which they knew to be untrue.  The facts, in my view, cannot fairly admit of any other inference.  Speculation is not required…
[67]         It follows that both Mr. and Mrs. Panag participated in a conspiracy to deceive ICBC about both how the accident happened and the status of Mr. Grewal as a witness to the accident.  They clearly intended ICBC to rely upon their representations, and ICBC as a result was left scrambling for a considerable period of time as it embarked upon an extensive investigation in an attempt to straighten out what would otherwise have been and should have been a straightforward matter.  This amounts to fraud.  See, for instance, ICBC v. Nisbet, 2009 BCSC 1570, at para. 85.
[68]         In the result, the Panags have forfeited their right to coverage under s. 19(1)(d) of the IMVA as well as s. 19(1)(e), and ICBC is entitled to recover against both of them.  Whether directly as a consequence of the Panags’ conspiracy to commit fraud or as a result of the application of the principles of unjust enrichment, this would include the moneys paid out to Mr. Panag for his material damage claim and to Mrs. Panag for her Part VII claim.  The total amount awarded to ICBC in this regard is $188,722.86, which I am satisfied accurately represents what ICBC paid out, to which I add pre-judgment interest of $8,460.21.  I have deducted $305.06 from the interest claimed because of the absence of evidence concerning the date when expenses related to surveillance were incurred…
[70]         In providing ICBC with willfully false statements and in conspiring to commit fraud, the Panags undoubtedly engaged in conduct that was reprehensible.  In the particular circumstances of this case, however, I note that the consequences of their actions have exposed them to statutory liability far beyond the actual financial consequences of their actions.  Had they succeeded in their deception, they would have saved a mere $801 plus whatever might have been gained through a potential personal injury claim.  Now they must pay over $188,000 plus interest…

The Cost of Insurance Fraud in BC

If you regularly read this blog you know I hate insurance fraud.  When fraudulent claims are weeded out that’s a good thing.  However, I equally dislike the cost of fraud being blown out of proportion.
Have you ever heard sound bites that insurance fraud is on the rise or spiralling out of control?  If you have a quick look behind the sound bite is important.
Occasionally the insurance industry provides press releases discussing the high cost of insurance fraud.  Often these are accompanied with the suggestion that some sort of ‘reform‘ is needed before fraud makes the system unsustainable.  We don’t get much of this nonsense in BC but in other parts of Canada this is an old song and dance.  The reforms that are urged typically boil down to stripping individual rights for the benefit of insurer profits.
So what is the hard data behind insurance fraud statistics in BC? It turns out, at least insofar as auto insurance claims are concerned, that there is no data.
The BC Utilities Commision recently asked for data addressing auto insurance fraud in BC.  Here is the exchange:

Other Provinces, Ontario in particular, have had a lot of discussion of the high cost of fraud.    A number is often put to the cost of fraud without any hard data to back it up.  It is important to look behind the sound bites to see what actual data the insurers have when they make such allegations.  Perhaps other Canadian insurers will be as willing as ICBC to show their hand and reveal what actual data they have.  Turns out, there may not be any.

Spying on Yourself With Facebook

As readers of this blog know I hate insurance fraud.  Sometimes fraudulent claims are weeded out through investigation efforts, other times fraudulent claimants unwittingly spy on themselves.
Today, ICBC reports another example of an individual ratting themselves out unwittingly through social media, in this case Facebook.  ICBC reports the following tale of insurance fraud undone through social media:
(the Claimant’s) troubles began when he rolled his vehicle on a rural road near Springhouse, a small community west of Williams Lake.
At the time, he was prohibited from driving so in order to collect insurance on the vehicle, which was a total loss, he convinced a friend to tell ICBC that she was the driver. At the time of the crash, three other people were in the vehicle and fortunately, no one suffered serious injuries.
The story came apart after ICBC’s special investigation unit (SIU) became aware that Joseph was bragging on his Facebook page that he had rolled his truck after drinking at a New Year’s Eve party and subsequently got a big payout from ICBC.
ICBC reports that the individual was ultimately criminally charged and penalized with a fine, a restitution order and a conditional sentence.

Questionable Insurance Practices – Another Form of Insurance Fraud?

Alan Shanoff of the Toronto Sun recently authored an interesting piece questioning whether insurance company practices could be viewed as insurance fraud.
When insurers catch customers defrauding the system the stories tend to make headlines.  That is a good thing.  Fraud should be weeded out and publicly condemned.  Alan suggests that these stories, however, may not be the only form of insurance fraud.  If insurers use practices that result in their customers being wrongfully deprived of their insured benefits can that constitute insurance fraud?  Should the media pay equal attention to stories of insurers short changing their customers?
As previously discussed, insurance fraud from either side of the fence deserves rebuke.   When claimants are unlawfully deprived of their insurance benefits they don’t have the deep-pockets that insurers have access to in order to find a legal remedy.  Alan makes some interesting observations in his article and I encourage anyone interested in the insurance fraud debate to review Alan’s article.

More on Canadian Insurance Fraud: Looking Beyond The Claimants

An interesting question was posed earlier this month by Alan Shanoff of the Toronto Sun when he canvassed a recent Ontario case where an insurance adjuster reached an “unconscionable” settlement with a claimant which was eventually set aside by Court order.  After detailing this case he asked “just how prevalent is this sort of practice? Unlike the Canadian insurance industry’s wild claim of $1.3 billion of insurance fraud per year, there are no estimates of how widespread abusive adjuster practices might be.”
Alan hypothesized as follows “Based purely on anecdotal accounts I suspect for every claimant who tries to exaggerate his injuries there’s an adjuster trying to minimize a claimant’s true injuries or deny a rightful claim.
I can’t say whether this 1:1 ratio is right or wrong, however Alan’s question could be the beginning of an interesting discussion.  If anyone is aware of statistics addressing how often self-represented individuals receive unfair settlements and the global cost of “unconscionable” settlements on the public at large this information should be publicized.  If unfair adjusting practices short change deserving claimants anywhere near the figures the Canadian insurance industry claims fraud costs them then that is a story that needs to be told.
Now I’m no fan of insurance fraud, however, when reading stories of the high cost of insurance fraud it’s worth keeping in mind that, unlike the insurance industry, claimants who get stuck with an unconscionable settlement don’t have hundreds of millions of dollars in profits to offset the cost of a raw deal.   Also, the insurance industry (to their credit) has a good track record of pursuing civil damages to punish and discourage fraudulent conduct.  The same likely cannot be said about individuals who have their insurance claims processed in bad faith.  As always, comments and feedback are welcome.

More on the Real Consequences of Insurance Fraud

Last month I wrote about why I hate insurance fraud.   A quick look at comments following stories of personal injury claims in the news provides insight into the harsh judgments personal injury claimants face by some members of the public.

Although the cynicism and doubt cast on legitimate claims is the most unfortunate consequence of insurance fraud , there are more well recognized effects of fraud and these are the costs to the public at large.  Fortunately the civil consequences for being caught in a fraudulent scheme can be high and this was demonstrated in reasons for judgement released last month by the BC Supreme Court, New Westminster Registry.
In last month’s case (ICBC v. Wiese) the Defendant was insured with ICBC.   Between 1997 and 2005 ICBC alleged that “there were an ongoing series of fraudulent acts and representations by Mr. Wiese to ICBC, both directly asserting certain facts to be true regarding his residence and also providing statements and other updated information though which that pretence was maintained” Over the years the Defendant was apparently involved in “14 separate accidents involving seven different vehicles…resulting in payments out from ICBC of $102,855.48“.
ICBC sued for damages and succeeded.  Mr. Justice Schultes awarded ICBC not only the cost of the claims paid out but a further $70,000 in punitive damages to punish the defendant for his repetitive “fraud on the public“.
If you ask a Plaintiff who has unfairly had their credibility called into question by an insurance defence lawyer they will tell you that insurance fraud causes harm to others beyond insurers.  Cases such as the above serve as a stark and welcome reminder that the cost and consequences of insurance fraud are high.

Why I Hate Insurance Fraud (and why you should too)

Recently Canadian Underwriter reported that insurance fraud costs Canadian insurers over $540 million annually.  The article highlights the fact that “Insurance companies around the world are reporting a higher number of bogus claims from cash-strapped motorists, homeowners and other con artists“.
Insurance companies, however, are not the hardest hit victims of insurance fraud.  Legitimately injured people are.
This is the reason why I hate insurance fraud.  It’s not just that fraud costs ICBC and other insurers money.  It’s not just that fraud compensates undeserving people.  It’s not even that insurance fraud is a crime.  The main reason why I hate insurance fraud is that it casts doubt on legitimate claims.
When insurance companies process thousands of claims, a few fraudulent ones will appear.  If an adjuster deals with enough of these it’s natural to develop a level of skepticism.  This skepticism can then go on to skew the way legitimate claims are perceived.  This in turn results in some deserving individuals being denied their needed insurance benefits.
When insurance companies suspect fraud they have significant resources to pursue claims for damages, claimants who are denied disability or other insurance benefits are not always so fortunate.  When statistics are published about insurance fraud remember that deserving claimants are the greatest victims of this crime.