Manitoba judge finds public insurer acted in bad faith, orders MPI to pay nearly $350K in damages
Caroline Barghout | CBC News | Posted: November 30, 2020 11:00 AM | Last Updated: November 30, 2020
MPI withheld benefits from woman injured in crash for 9 years, then fought settlement for 7 years more
Manitoba's Court of Queen's Bench has found the province's public insurer acted in bad faith for nearly two decades in its handling of a case involving a woman who was severely injured in a 1998 car crash.
Manitoba Public Insurance must now pay that woman nearly $350,000 in punitive and mental distress damages, in addition to a 2012 settlement of $348,248.22 it paid for unfairly withholding benefits from her for nine years.
"This amount is the only manner the court has to deter MPI from treating another claimant in the manner it treated Evelyn [Martens] for not living up to its legislative mandate," wrote Justice Sheldon Lanchbery in a 95-page decision released Nov. 10.
Evelyn Martens was 36 when her vehicle was T-boned on Dec. 4, 1998. She suffered extensive injuries, including a shattered hip, femur and part of her pelvis. Almost all of her ribs were fractured on one side, and she was paralyzed from the waist down.
She spent a year in hospital and another year in a wheelchair until she learned to walk again.
Martens received disability benefits and income replacement after the accident but the payments stopped in 2003 after an anonymous tipster told MPI she had gotten a job and hadn't reported it.
MPI terminated Martens' benefits and charged her with fraud. What followed was a 17-year battle MPI later told the court was "not our finest hour."
"This is the rare case that requires punitive damages. MPI is a public insurer with a statutory mandate to assist claimants and ensure a claimant receives the benefits to which they are entitled," Lanchbery wrote in his decision.
Lanchbery said as part of Manitoba's no-fault insurance, MPI is mandated to deal with claimants fairly and assist them in obtaining all the benefits to which they are entitled, without them having to hire a lawyer.
"No Manitoban should be placed in the situation Evelyn found herself in to receive insurance benefits entitled by statute," Lanchbery wrote.
Benefits stopped for 9 years
At the time of the crash, Martens and her 15-year-old son were living at their family's farm in the rural municipality of Brokenhead. Her two daughters were away at university.
Martens had been talking to Manitoba Child and Family Services about opening a group home for troubled teens. When the benefits stopped, she could no longer afford the family farm and was forced to go on social assistance and give up her dream.
"What they did to me was unacceptable," said Martens, who now lives in Alberta. "I didn't do anything wrong and … they took so much of my life away."
WATCH | Evelyn Martens's 20-year battle with MPI:
In 2005, Martens was acquitted of fraud after a judge found there was sufficient evidence she had told her psychiatrist and her rehabilitation consultant she was doing respite work at a group home and wanted to foster a child.
MPI reinstated her benefits for five months, then decided to terminate them for good because it didn't agree with the judge's ruling, Martens' lawyer said. Martens had to fight for seven years before MPI paid her again.
"What was I supposed to do? I could not get any funding to go back to school to continue and I couldn't go back to my previous employment. I still have a disability. I couldn't get any funding," Martens said.
In 2012, Winnipeg lawyer Bill Gange agreed to take Martens' case, even though she didn't have any money to pay him. Within six weeks, MPI agreed to a settlement that would pay Martens $348,248.22 for the nine years they withheld her benefits.
"When they were told by [the judge] that they were wrong and that Evelyn had not committed fraud, they ought to have taken steps immediately to have rectified their mistake," Gange said.
In 2013, Gange helped Martens sue the public insurer for acting in bad faith while handling her claim.
Internal documents revealed in court showed in 2005, MPI realized it erred in the Martens case. However, instead of offering a fair settlement, they looked for what one of the internal documents called "wiggle room."
"Something like this should never, ever, ever happen, but it did," Gange said.
After the fraud case, a senior Crown prosecutor for Manitoba Justice wrote a memo to the corporation laying out deficiencies in MPI's overall reporting requirements and the failure of its independent claims manager to document critical interactions with Martens.
"It was almost breathtaking, the number of times that bad decisions were made that were made against Evelyn's interest," Gange said.
"Nobody deserves to be treated like this and especially nobody deserves to be treated like this by a government monopoly agency."
MPI considering an appeal
A spokesperson said MPI can't comment on this case "due to confidentiality" and the corporation is now considering its options.
"MPI is disappointed in the decision and is reviewing it carefully for the purpose of considering an appeal," an MPI spokesperson said in an email to CBC News.
MPI wouldn't say how many times the public insurer has been found to have acted in bad faith when dealing with claimants and ordered to pay damages.
The spokesperson did say MPI continually reviews its process and procedures and has enhanced a number of processes over the last 26 years.
"I can't think that I'm the only person that they do this to. I mean, it was done with such ease," said Martens, who added she's been working hard not to let this ordeal destroy the rest of her life.
"I would hope that MPI takes a very hard look at itself, at its procedures, and ensures that everybody involved at MPI understands that its mission is to make certain that the claimants that come to it receive the benefits to which they are entitled," said Gange.
If the corporation's employees went to work with that kind of attitude, what happened to Martens would never have occurred, he said.
"You can't do this to people's lives and just say that it's OK, you're allowed to do that. You have to realize you're dealing with a person that has just as many rights as you do," Martens said. "I didn't ask for anything else other than to just be fair."