Auto insurance fraud lawsuits continue against Toronto medical assessment centres

Several companies and individuals involved in medical assessments and treatment of people injured in auto accidents were recently denied leave to appeal an earlier court ruling, which had denied their motion to strike out three Ontario auto insurance carriers’ claims against them.

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.

At least four other Ontario auto insurers and their subsidiaries have named Pacific and Fairview in lawsuits. The Dominion’s lawsuit has a total of 14 named corporate and individual defendants. Fairview and Pacific are based on Toronto.

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.

None of the allegations have been proven in court.

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 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.”

In a ruling released March 5, 2013, 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.

However, in a ruling released Nov. 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 doctrine of merger applies to strike out a conspiracy claim at the pleadings stage in a situation where it is plain and obvious that the plea of conspiracy adds nothing to the main cause of action being asserted,” Justice Sachs wrote. “In this case, it is possible that a defendant, after a trial, could not be found liable for the tort of fraudulent misrepresentation, but could be found to have conspired to commit an unlawful act.  Whether this proves to be the case cannot be known until the trial of the action.”

Court records indicate that in a separate motion against Allstate, the defendants have succeeded in having claims against personal defendants struck.

Allstate filed in May 2012 a lawsuit against Fairview, Pacific and three individuals. In its statement of claim, Allstate made allegations concerning forms submitted in accordance with Ontario’s Statutory Accident Benefits Schedule (SABS). Allstate noted that in the course of providing auto insurance coverage, it receives treatment and assessment plans, known as OCF-18 forms. Those plans require statements from medical practitioners approving those treatments. Before Sept, 2010, OCF-22 forms were used.

Allstate alleged the named defendants submitted claims “purported to have been approved and/or authored” by eight doctors, when in fact — according to Allstate — they were not. Those claims have not been proven in court.

In a ruling released Aug. 23, Mr. Justice John McCarthy ordered that Allstate’s claims and allegations against the personal defendants, as well as a portion of the pleading alleging conspiracy, be struck. Justice McCarthy dismissed the balance of the defendants’ motion, which was to strike “some or all of Allstate’s statement of claim, dated May 9, 2012, ‘on the grounds that it discloses no reasonable cause of action.'”

Justice McCarthy noted that directors and officers of corporations may be held personally liable for certain tortious acts, but he found that in Allstate’s claim, there were “simply insufficient facts pleaded of alleged wrongdoings by the personal defendants against the plaintiffs directly to support any cause of action against them personally.”

Allstate had originally named the owners of Fairview and Pacific – as well as a doctor alleged to have been medical coordinator for both centres – as individual defendants. Allstate has amended its statement of claim, according to a court ruling on costs released Oct. 30.

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, 2013, 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.