Accident insurance and false declaration: the consequences

Our partner CJE, Avocats Conseillers d’Entreprises, reviews the consequences in the event of false declarations for accident insurance following the ruling by the Federal Court on 11 June 2021.

Should the performance-dependent 13th month bonus be taken into account when calculating daily allowances?

Because it depends on the employer’s performance, declaring a hypothetical 13th month bonus is not part of the income taken into account when calculating daily allowances, and may constitute a false declaration. This would allow the insurance company to refuse benefits and demand reimbursement of daily allowances already paid.

The actions of both the employer and the policy holder may constitute a criminal offence under article 112 LAA. It is therefore necessary to limit declarations to actual income when applying for accident insurance benefits. Income prospects cannot be taken into consideration. It is essential that you:

• check the adjustments of daily allowances received;
• report any errors to your accident insurance provider immediately.

In the case described below, the “error” in declaring the 13th month bonus was made twice and daily allowances collected for several years. The policy holder should have immediately realised their error, given the fact that the daily allowances paid were higher than the salary normally made.

In this decision, the Federal Court ruled that there were grounds to refuse to provide accident insurance and request the restitution of all benefits paid.

The facts

Through declarations concerning two claims, the policy holder declared a base salary of CHF 9,000, to which were added family allowances of CHF 500 per month and a 13th month bonus of CHF 9,000 per month, i.e. a total annual salary of CHF 216,000. The accident insurance company provided their services for the case, paying daily allowances on the basis of the maximum insured annual salary of CHF 148,200.

When questioned by the insurance company, the policy holder reported that the employee received a monthly salary of CHF 9,000, as well as a 13th month bonus of CHF 9,000, and that the notes in the accident reports referencing a 13th month bonus of CHF 9,000 per month were clearly an error.

The Cantonal Court, whose decision was approved by the Federal Court, held that the amounts declared by the policy holder in their accident declaration, particularly that of the 13th month bonus, could not be attributed to a simple error.

Taking into account the false declarations by the policy holder, the accident insurance company had grounds to:

• refuse to pay out benefits;
• claim back the reimbursement of daily allowances paid unduly.

 

The law

According to art. 46 para. 2 LAA, “theinsurer may halve any premium if, as a result of an inexcusable delay due to the insured or their survivors, it has not been notified within three months of the accident or death of the insured; it can refuse the premium when a false accident declaration has been intentionally sent to it.”.

In the case above, it was considered that the insured had been held responsible for a false declaration within the meaning of this clause by claiming to receive a higher salary than that actually paid in order to obtain insurance benefits that could not reasonably be claimed.

The insured contests any fraudulent intention by declaring a 13th month bonus of CHF 9,000, to the extent that the application of art. 46 para. 2 LAA is not justified.

The Federal Court rejects this argument insofar as it is not for the accident insurer to verify the accuracy of the declarations of the insured. Indeed, for art. 46 para. 2, 2nd sentence, LAA is applied, and a simple deception is enough. It is not necessary for this deception to be astute in matters of fraud (art. 146 para. 1 CP). Thus, the application of art. 46 para. 2 LAA is not subject to the requirement of minimum prudence or verification on the part of the insurer (ruling 6B_488 / 2020 of 3 September 2020, recital 1.1; KURT PÄRLI / LAURA KUNZ in: Basel comment, Unfallversicherungsgesetz, 2019, no. 15 ad art. 46 LAA).

In any case, and insofar as the insured admitted in their appeal brief to the Federal Court that they had never received a 13th month bonus, the declarations of the insured were false.

In this regard, it should be noted that although the 13th month bonus is only hypothetical, since it depends on the employer’s performance, it does not constitute income to be taken into account for the calculation of daily allowances (cf. JEAN-MAURICE FRÉSARD/MARGIT MOSER-SZELESS, op. cit. no. 179 p. 956).

 

Decision

In this ruling, the Federal Court held that by announcing that they had received a 13th month bonus (regardless of the amount), the insured (and the employer) had intentionally made false declarations in order to obtain benefits from the accident insurance provider. The Court ruled that there were grounds to refuse to provide accident insurance, as well as request the restitution of all benefits paid.

 

This article was written by the cabinet CJE Avocats Conseillers d’Entreprises.