In Paul-Hus c. Sun Life, Compagnie d’assurance-vie, 2023 QCCS 3890, the Superior Court reminds us of the importance of answering questions truthfully and completely when taking out an insurance policy. Faced with the question of whether the insured intended to deceive the insurer, the Court’s analysis shows that credibility remains a key element.
On March 13, 2015, Automobiles Illimitées, of which the applicant Paul-Hus is the sole shareholder, applied for a critical illness policy with Sun Life. The insured person was the applicant, and the beneficiary is Automobiles Illimitées.
On March 17, 2015, Paul-Hus underwent a telephone interview during which he was asked questions about his lifestyle, state of health and medical history. As nothing of significance was declared, Sun Life approved the application and issued the policy.
On August 16, 2018, Paul-Hus submitted a claim to Sun Life. In it, Dr Brunet, the neurologist who had been treating Paul-Hus for the past few years, stated that the diagnosis was progressive muscular atrophy, the first symptoms of which appeared in 2013. After investigating, Sun Life advised Paul-Hus that it would refuse to indemnify him, as he had not answered three questions on the questionnaire correctly, and that, had he done so, it would not have issued the critical illness policy.
Ten days earlier, Automobiles Illimitées filed for bankruptcy on December 12, 2018.
Finally, on May 31, 2021, Paul-Hus served Sun Life with an Application to Initiate Proceedings (the “Application”). He alleged a diagnosis of amyotrophic lateral sclerosis (ALS).
The Court first concludes that Paul-Hus’ statements, during the March 17, 2015 interview are inaccurate and likely to lead to the nullity of the insurance policy.
Misrepresentations and concealment
Indeed, in this interview, Paul-Hus failed to reveal that he had been suffering from weakness in his left arm and hand for several years, for which investigations were underway. He had reported his symptoms a few weeks earlier to Dr. Brunet, his treating neurologist, who had ordered a series of tests to establish the cause of the weakness. The consultation with Dr Brunet followed a referral from a plastic surgeon consulted in January 2015 by Paul-Hus, because of the abnormal position of his hand. Dr Brunet further noted that this weakness had caused significant skin lacerations to his fingers when he dropped a glass in April 2014.
In his Application, Paul-Hus maintained that he experienced no symptoms prior to the issuing of the policy, and that the development of his illness would have been sudden. However, his medical records both before and after the policy reveal a “slowly progressive” onset of left upper limb weakness since August 2013.
Plainly asked if he had ever been treated for or had symptoms of arm weakness or any other joint or limb disorder or disease, he answers “no”. Asked if a doctor had recommended any tests or examinations, he again answers “no”. He then failed to state that he is due to undergo cervical and brain imaging, magnetic resonance imaging and blood tests, and that he was undergoing neurological investigations.
Similarly, when asked about any diagnostic examinations and tests he may have had in the previous five years, he answered “no”, neglecting to declare an EMG undergone just three weeks prior, a lumbar puncture and MRI done as part of an assessment for migraines with photophobia, as well as a CT scan performed in January 2015.
Faced with such evidence, the court concluded that Paul-Hus’s declarations at the time of taking out the policy were inaccurate and likely to lead to the policy’s nullity. But fraud must still be established, since the policy had been in force for more than two years at the time of the claim (article 2424 C.c.Q.).
Fraudulent nature of the declarations
The burden of proof on an insurer seeking to cancel a policy for misrepresentation is onerous. The Court refers to the leading case of Giguère c. Mutuelle Vie des fonctionnaires du Québec (1995 CanLII 4658 (QC CA)), which explains that intent to deceive is an additional essential element of the act.
Although Paul-Hus alleged he neither felt nor suspected any symptoms of illness prior to the March 17, 2015 telephone interview, his medical records revealed quite the opposite. But that’s not all. During trial, it was observed that Paul-Hus consulted a document that would be obtained and produced by Sun Life. Justice Germain writes:
 (…) This is Sun Life’s refusal letter of December 28, 2018, which he annotated with the words “good faith” and “answered no in good faith I was waiting for nothing no results”. It seems curious, to say the least, that he would take the trouble to write these terms as a reminder and feel the need to repeat them multiple times in the course of his testimony and when cross-examined. [Our translation]
Justice Germain pointed out that it is not enough to repeat that one has acted in good faith to justify such omissions. In the Court’s opinion, these elements clearly demonstrate Paul-Hus’ intention to conceal his true state of health in order to deceive Sun Life and thus obtain the desired insurance coverage. He could not have been unaware that his symptoms and the investigation in progress were of such a nature as to significantly influence the insurer’s decision to accept the risk, and his evasive answers to the questionnaire are perplexing.
Materiality in terms of risk
Finally, as Sun Life met its burden of proof by demonstrating the impact of the undeclared facts on its assessment of the risk with the help of an underwriting expert, Justice Germain declared the insurance policy null and void ab initio.
Interestingly, Paul-Hus maintained in his Application that on February 1, 2018, he was diagnosed with amyotrophic lateral sclerosis. However, the evidence reveals that at no time was such a diagnosis issued. This illness, unlike the one diagnosed in his case, is covered by the policy.
Furthermore, it should be remembered that, if Paul-Hus is the person to be insured, the beneficiary of the policy is Automobiles Illimitées. However, in 2018, the company went bankrupt. Consequently, as raised by Sun Life and rightly retained by the Tribunal, only Automobiles Illimitées had the required interest to claim payment of the critical illness insurance benefit.
The action could have been dismissed for this reason as well.
In sum, credibility is still the key element when it comes to establishing insurance fraud.