For the cynical among us—and who isn’t—I would like to share with you an extract from Arbitrator Miller’s reasons in Owusu v. Lloyds, FSCO File No. A02-000499, dated April 2, 2003. This arbitration decision of the Financial Services Commission of Ontario considered the claim of a whiplash victim for alleged caregiver expenses and compound interest under sections 13 and 46 of the Statutory Accident Benefits Schedule.


As counsel for the Insurer, I expected an uphill struggle. The claimant was a single mother, and the claim was for child care expenses for a two-year-old infant. What tribunal in the world dared rule against her? This one:

Based on the evidence … I do not find that there is credible, plausible evidence to show that Mrs. Owusu incurred caregiving expenses for the services of Ms. Appiah-Kubi.

First, I find that there is a serious discrepancy in the amount Ms. Appiah-Kubi was allegedly paid for her services. Although both Mrs. Owusu and Ms. Appiah-Kubi testified that Ms. Appiah-Kubi was to be paid $250 a week, they both gave different amounts as to what Ms. Appiah-Kubi was actually paid – Mrs. Owusu claiming that she paid Ms. Appiah-Kubi $100 a month and Ms. Appiah-Kubi insisting several times in her testimony that she was paid $100 a week.

I find this to be a significant discrepancy. It is only reasonable to expect that if these alleged payments were made over the period of a year and a half, each would know exactly how much Mrs. Owusu was paying Ms. Appiah-Kubi.

Second, Ms. Appiah-Kubi admitted in her testimony that she could not read and I accept this to be true. However, her invoices for caregiver services includes the duty of “reading to her.”

. . .

Third, Mrs. Owusu did not provide any plausible explanation as to why the investigator’s report stated that she was living at the Falstaff Avenue address and not the Kipling Avenue address. I find the reason she gave, namely, that no one in the Kipling apartment building knows she is living there because she sublets the apartment, not to be plausible. If Mrs. Owusu has in fact been living at the Kipling Avenue address for three years, at a minimum the management office and/or her neighbours would know if she is living there, especially if she has a young child.

Finally, Mrs. Owusu was clearly not seriously injured in this minor accident. In fact, her medical evidence shows by August 1, 2001 she was 60 per cent better. This being the case there is no plausible reason why Ms. Appiah-Kubi would forsake her own family and devote all of her time to care for Mrs. Owusu’s child and do all of her housework.

I do not find it plausible that Ms. Appiah-Kubi, who had three children of her own, would spend seven days a week, eight to nine hours every day, not counting traveling time, for more than a year and a half looking after Mrs. Owusu’s daughter and doing Mrs. Owusu’s housework on the promise that one day she would be paid.

Accordingly, for all of these reasons I find that Mrs. Owusu has not presented any credible, plausible, reliable, objective evidence to support her claim that she incurred caregiving expenses as a result of her car accident on May 25, 2001. Accordingly, for all of these reasons I find that pursuant to section 13 of the Schedule Mrs. Owusu is not entitled to a caregiver benefit.

The Owusu decision is not legally important because it offers no novel legal precedent for use in future cases. As such, it can be easily overlooked among the myriad of FSCO decisions which deal with entitlement to accident benefits. I believe that it is important in two respects. First, it restores faith in the tribunal. Second, it reminds us that the onus is on the claimant to prove the entitlement, not on the insurer to prove that a fraud has been committed.

Never go to arbitration? One difficulty facing the insurer representative at the mediation stage is that the machinery of the Dispute Resolution Group at FSCO is designed to stop cases from reaching the final stage of the process. This is in part a result of the automobile insurance crisis of the 1980’s, the theory (approaching dogma) that escalating costs and awards in tort litigation was bringing down the Ontario insurance industry. One FSCO mediator, in caucus, was stumped when presented with overwhelming evidence of fraud, but suggested that my client should pay half of the claim to settle the case, because “You know, these cases all settle.” The hitherto unregulated industry of “A.B.” paralegals, as well as many lawyers, have certainly taken advantage of this unprincipled approach to dispute resolution. They have advanced claims without due regard to whether they are advanced in good faith. (It is not only the insurer but also the insured who must act in good faith. This is often forgotten.)

Claimant representatives work the system and turn a blind eye to the legitimacy of their clients’ claims. They do so in the knowledge that insurers will likely not call their bluff. This may be in part attributed to the rules-based procedures leading up to arbitration. A.B. adjusting has become such a specialist field, mainly because the rules and deadlines are complex and forever changing. There is an “A.B.” lingo made up of acronyms and form numbers. Claimants tend to employ process to advance unmeritorious claims, because they know that the rules impose serious consequences against insurers who refuse to pay.

Accident benefit claims also tend to be supported by sympathetic disability certificates and medical reports penned by those who have an interest in validating the claimant’s disability. The paucity or even absence of objective evidence of disability does not phase a claimant’s representative, because it is accepted by clinicians that real disabilities do exist where the only evidence consists of subjective complaints. We all know about chronic pain, fibromyalgia and post-traumatic depression, and so do the claimants (or their representatives).

I believe that it would be of great benefit to both A.B. adjusters and many insurance lawyers to take advantage of any opportunity to sit in on an arbitration. The most dramatic change from the application process which precedes it is that it is, in comparison, not mired by rules. The claimant, not the insurer, is on trial. Moreover, except for the very relaxed rules of evidence, it is a trial, albeit a more cost-effective version of a court trial. Counsel for the insurer can subject the claimant to the most grueling of cross-examinations without fear of “bad faith” or any sense of unfairness. It is recognized that where the impairment claim is based on subjective complaints, the doctor’s opinion is only as good as the credibility of the patient.

The Owusu arbitration featured some good opportunities to expose the fraud. For example, during the direct examination of the housekeeper-nanny by the claimant’s lawyer, I suddenly realized that the reason why certain questions elicited peculiar answers: She had to be illiterate. The only writing of which she was capable was to write her name, in order to sign documents as opposed to an “X”. The nanny had submitted a series of invoices which were then filed by the claimant as evidence that she had paid the nanny for the section 13 caregiver services. The services were listed. I asked her to identify her signature at the bottom of one of the invoices, which she quickly acknowledged. I then asked her to read out loud the following words among the listed services: “READ TO HER [i.e. the child],” to which she confessed she could not read!

When it thus came out that the invoices were made up, the claimant took the “alternate” position that she only needed to have “incurred” the expense—as opposed to having paid it—to make the SABS claim. On re-examination by the claimant’s lawyer, she stated that the invoices were in error and that she had agreed to be paid out of the proceeds. The legal basis for this change of position was technically correct. A previous ruling by a FSCO arbitrator had stated that the expense only needed to be incurred, and the fact that the supplier of the service (the housekeeper, in that case) had yet to be paid for services rendered was not a ground for denying the claim: Stargratt and Zurich, October 4, 2001, FSCO file no. A99–000521. Consequently, legally speaking the claimant’s failure to prove that money had changed hands did not put an end to her claim. This very technical position, valid if the services were in fact rendered, foundered because the facts got in the way.

First, my adjuster had arranged for investigators camp out in the stairwell on the floor of the apartment building where the claimant lived. This proved an excellent decision on the adjuster’s part, because no one fitting the description of the nanny ever showed up, let alone during the hours stated in the invoices. We were able to file the investigators’ reports casting doubt on whether the nanny was ever working at the claimant’s home.

Second, the medical evidence was of a mild to moderate impairment. This was perhaps sufficient to meet the section 13 requirement according to the case law. However, the fact that the nanny was prepared to give up almost two years of her life to on spec to help an acquaintance who was only mildly to moderately impaired from looking after the child, was absurd. (Again, the claimant’s lawyer’s mastery of the SABS rules confronted common sense at the arbitration stage.)

Third, when the claimant’s lawyer, in support of the new theory of “incurred” caregiver expenses, asked the nanny precisely how much she expected to be paid if the arbitrator ruled in the claimant’s favour, the figure she stated was the total of the section 13 weekly maximum, multiplied by the number of weeks. The problem with this was that the compound interest under section 46 was so great, the way the evidence came out the claimant, who had not paid anything, was going to pocket a very substantial amount of money and was not going to give it to the nanny who purportedly performed the services on spec. In other words, the claimant was blatantly out to make a profit on the claim.

What the result in Owusu shows is that once the claimant or the alleged service provider’s credibility is rattled on one issue or another, clever rule-based arguments regarding the economic terms under which the services are provided, whether for “cash in hand” or “on spec” are no match for common sense and a diligent search for the truth. Fraudulent accident benefit claimants approach the process with an expectation that their cases will settle out during the application and mediation stages, that is to say, before anyone is allowed to ask them the really hard questions.

There will no doubt be some relief to this state of affairs under the new subsection (1.1) of section 33 of the SABS, filed July 2, 2003, providing for examination of the claimant under oath. The effectiveness of such an examination in stopping fraudulent claims in their tracks will depend largely on good preparation and strategy. There is no provision similar to Rule 31.11 of the Rules of Civil Procedure, prohibiting use of the transcript by the claimant/plaintiff. Thus, control of the witness can be critical to prevent the examination from backfiring on the insurer. Adjusters are used to taking statements in a full and balanced manner. By contrast, the opportunity to examine under oath should be employed for the purpose of testing the claimant’s credibility against prior statements and objective facts. If the examination is too comprehensive and fails to scrutinize the claimant’s account, the insurer is liable to have the transcript filed by the claimant as the first exhibit at the arbitration.

There is good reason for adjusters and claim examiners to feel cynical about many accident benefit claims, and how the rules have fostered a “pay, pay” culture especially among adjusters brought up under the new automobile insurance regime. This should not, however, translate into cynicism for the whole process. If you have solid evidence to deny the claim, prepare the case and stand firm. Speak to your counsel about setting up a budget and reserve. At the end of the SABS process, arbitration can be like the clearing after the long walk in the forest.

2003 © R. Lee Akazaki received his B.A. and LL.B. from the University of Toronto, and practices law with Gilbertson Davis Emerson LLP, Barristers and Solicitors. He is certified by the Law Society of Upper Canada as a Specialist in Civil Litigation.

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