Recent developments helping auto fraud-fighting efforts in Ontario

Insurers should be heartened by some recent decisions around auto fraud, perhaps signalling a shift from what some may have been viewed as a pro-claimant bent at the Financial Services Commission of Ontario (FSCO), one lawyer says. 

“There have been in the last couple of months some massive developments in terms of how we’re addressing fraud from an accident benefits context in Ontario,” Kadey B. J. Schultz, a partner with Hughes Amys LLP, suggested at the Ontario Insurance Adjusters Association’s (OIAA) conference in Toronto Wednesday. 

One example was FSCO’s move in January to lay 84 charges under Ontario’s Insurance Act against two Toronto rehabilitation clinics and four people alleged to have made false or misleading statements to auto insurers or engaging in unfair or deceptive acts or practices.

Schultz also pointed to the importance of language contained in a FSCO arbitrator’s ruling from mid-January. Khamo and Economical, heard in October 2011, involved an applicant, Nadiya Khamo, who was injured in a motor vehicle accident in October 2008.

The car in which Khamo was a passenger, intending to reverse, accidentally sped forward and slammed into a concrete divider on it way to a parking garage. Khamo developed a headache the next day and pain in her arm, which spread gradually into her whole body, especially her neck and back.

At the start of the hearing, “counsel advised that Ms. Khamo was not pursuing her claims for caregiver, attendant care or housekeeping benefits,” arbitrator Susan Sapin writes. “The only remaining issues relating to those claims would then be interest and, possibly, a special award as claimed by Ms. Khamo.”

Sapin found significant irregularities and factual inconsistencies regarding Khamo’s claims, including related to her significant pre-existing history of arthritis in her knees, migraines, chronic and severe pain and depression. The conditions were not noted by any of her treatment providers or assessors in the assessment and treatment plans they submitted to Economical Insurance.

Economical conceded that claims related to treatment plans at a rehab clinic, both in December 2008, were not paid in a timely manner through oversight. It advised that these were paid on Nov. 3, 2011, a week before the arbitration. “Economical should pay interest from the date of the invoice until the amount was paid, at 1% per month,” the ruling notes.

“Ms. Khamo was only partially successful in a case that I find should have been resolved at mediation or at the pre-hearing stage. The commission is not a collection agency for treatment facilities. The parties had ample opportunity to resolve their accounting, paperwork and technical disputes in advance of the arbitration hearing. Each party shall bear its own expenses of this arbitration proceeding,” Sapin concludes.

“A lot of the case law that has emerged in the last year is very supportive to the insurance industry, forcing claimants and clinics to prove their case in a way that perhaps shows a bit of a shift compared to what we’ve seen in the past,” Schultz told seminar attendees. Citing the Khamo case, “it is amazing how much that kind of dispute uses up all of our resources, particularly FSCO, which continues to operate in a significant backlog,” Schultz emphasized.

But some positives are developing, including the move through legislation and FSCO “to empower insurers to be more assertive in their confirmation of the veracity of the claims that are being presented,” she noted. “We’re really watching the flow of the claims that are coming in from different service providers,” Schultz said.

Laurie Walker, executive vice president of the Client Services Division at Granite Claims Solutions, suggested there are tools available to help identify issues that may prove problematic. The Health Claims for Auto Insurance system can be employed, for example, to check clinics that may be of concern, Walker noted.

The individual at a company with report viewer access can see how many times a particular clinic has invoiced an insurer, right down to the hour. “You can draw the information easily and find out which files, were they validated and then consider as a company or as an organization whether you’re going to pursue subrogation and reimbursement,” Walker reported.

It is worth the time to do an extra-thorough check on certain files. “I would certainly do a lot that is available under the [Statutory Accident Benefits Schedule] to verify those accounts before I would put a penny down,” Schultz advised. “We’re going to do a little forensic background, we’re going to do some confirming work to make sure that the service provider existed in the context that they were put out to exist and that the services were actually provided.”

Walker added there are some insurers and organizations that have subrogation units and it might be wise to transfer some of that workload to them.

If it is not a legitimate claim, Schultz said, “the companies that are targeting certain insurers, once they know that you’re really paying attention to those files, they do actually back off.”