False Fraud Allegations Spur Punitive Damages in BC

crosswalk photo with ICBC logo and insurance document overlaid

The National Post reported recently on a judicial decision from British Columbia ordering the Insurance Corporation of British Columbia, ICBC, to pay an immigrant couple more than $350,000 in punitive damages after the corporation falsely accused them of insurance fraud. In the judgment, the prosecution brought against Danica Arsenovski was described by Justice Susan Griffith as “malicious,” and the actions of the ICBC “brought fear and shame to a vulnerable person.”

Justice Griffin found that the investigation operated from a presumption of guilt in respect to Mrs. Arsenovski.

The couple was leaving an English language class in Burnaby one evening in January 2000 when they were involved in a collision. The couple was navigating a crosswalk when Arsenovski’s husband was struck by a car and Arsenovski herself also fell and was injured. The couple spoke very little English, so when a friend encouraged them to report the incident, the Arsenovskis had only a vague understanding of the purpose of contacting the ICBC. The decision stated that Mrs. Arsenovski believed that ICBC might provide assistance with medical and ambulance bills. “She was not told that they could make a claim for damages and that this was the reason for meeting with ICBC,” read the decision.

“She said there was not a similar system for making a report about an accident in the former Yugoslavia. […] She did not understand anything about the process at ICBC or think the statement was important in every detail.”

In response to the Arsenovski’s claim, ICBC forwarded a report to Crown counsel recommending three charges of fraud against the couple. The report alleged Arsenovski made false claims that she was hit by the car. This allegation was accepted by Crown counsel, who charged Arsenovski with making a false statement. Justice Griffin found that rather than a presumption of innocence, ICBC investigator John Gould operated from a presumption of guilt in respect to Mrs. Arsenovski. “The false statement Mrs. Arsenovski was alleged to have made regarding how she fell was never made by her to ICBC. There was no such statement and so it could not have been false,” Justice Griffin found.

The judge ordered ICBC and special investigator John Gould to pay Arsenovski a total of $7,225.34 for legal fees, $30,000 for emotional distress and $350,000 in punitive damages. Coincidentally, this is not the first time that ICBC has been fined punitive damages for its adjusting of a claim.

The Arsenovski decision is timely against a backdrop of the Ontario Provincial Government announcing plans to establish a “serious fraud office” with a special focus on auto insurance fraud. The announcement was included in the budget announced by Ontario Minister of Finance Charles Sousa on February 25th. “Auto insurance fraud continues to be a serious problem and has plagued the Ontario auto insurance system costing as much as $1.6 billion a year,” said Kim Donaldson, Vice-President, Ontario, Insurance Bureau of Canada. “We are thrilled to see the Government make the fight against fraud a priority.”

The $1.6 billion figure is derived from a KPMG study released in June of 2012 that actually estimates auto insurance fraud in Ontario costs between $769 million and $1.56 billion per year.  This estimate was based on review of statistics between 2006 and 2010. Since the 2012 KMPG report was released, there have been very significant changes to the Ontario insurance legislation and regulation and the rights and benefits of automobile accident victims continue to be drastically reduced. The recent announcement does not say how much will be spent on this initiative nor what has been spent on “fighting fraud” to date. The announcement does also not mention what the effects have been of all of the changes in the insurance industry.

While insurance fraud is clearly unacceptable, the Arsenovski decision shows that the insurance companies’ zeal to find fraud, at times, comes at the expense of the well-intentioned victims of car accidents.



Written by

Roelf A.M. Swart is very pleased to have joined Elkin Injury Law as an associate lawyer in 2009. Roelf’s practice consists plaintiff personal injury law with a focus on tort, accident benefits and long term disability disputes. Roelf enjoys successfully assisting people with their cases and bringing their cases to a successful resolution.


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