EQC responds to accusations it blacklisted a vulnerable quake victim after wrongly accusing her of lying to get a free heat pump

By Jenée Tibshraeny

The Earthquake Commission (EQC) has responded to claims from an insurance lawyer that it declined an elderly woman’s quake claim, after wrongly accusing her of fraud.

Andrew Hooker, in this interest.co.nz opinion piece, describes how his client accepted a free heat pump offered to her by EQC.

But as it turned out, she hadn’t qualified to receive the heat pump. On being told this she offered to pay for it, but EQC said this wouldn’t be necessary.

Next thing you know, her entire claim for damage caused to her house by the 2010/11 quakes was declined and she was deemed uninsurable.

Hooker says the woman argued no one had asked her if she qualified or even told her what was needed to qualify to receive the heat pump.

However EQC told the woman she should’ve known she didn’t qualify and EQC “assumed” she lied to get the heat pump.

The woman hasn’t taken her case to court and has refused to disclose her name, so the case is largely a matter of “he said, she said”.

Yet it can’t be ignored.

EQC entitled to decline an entire quake claim over a false heat pump application

While he can’t comment on specifics, EQC’s acting general manager of shared services, Jeff Galt, says the agency is entitled to decline a claim for quake damage if someone makes a false application for a heat pump.

Galt explains: "The Winter Heat Programme was introduced in 2011 to provide heat pumps for Cantabrians who were without a source of heating following the 2010 and 2011 earthquakes.

“EQC installed over 18,000 heat pumps in Canterbury homes, and customers making a claim under the scheme had to demonstrate that they had no functioning heat source due to earthquake damage to be eligible.

“EQC carried out a review of this home that had been fitted with a heat pump in 2013 to ensure that the application was valid.

“If an application for a heat pump was deemed to be false, then EQC was required to investigate, and take the appropriate action.

“This may have included a claim settlement being declined under schedule 3 of the Earthquake Commission (EQC) Act or seeking to recover costs.”

Schedule 3 of the EQC Act says:

The Commission may decline (or meet part only of) a claim made under any insurance of any property under this Act where…

(e) there is or has been on the part of the insured person (whether to the Commission or its agents or to the insurance company concerned)—

(i) any wilful and material misdescription of any of the property, or of any building or land in or on which the property is situated; or

(ii) any misrepresentation as to any matter material for the purpose of estimating the value of the property; or

(f) the claim is in any respect fraudulent.

Looking at (ei) and (f), the woman couldn’t have given a "wilful" misdescription of her property to try to prove she qualified for a heat pump, nor could she have made a "fraudulent" claim, if she was never asked to provide any description of the type of heating she had in her home.

Should EQC have taken such a hard line in its interpretation of the law?

But the concerning part is that even if her version of events is false, and she did intentionally lie about her situation to get a heat pump, was it fair for EQC to interpret the law in its harshest form, and deny her entire claim?

It could have only denied part of it. Or under (ei), EQC could have recognised that her “misdescription” of the property wasn’t material, in that a $2000 heat pump isn’t much compared to the cost of having your insurance claim denied and getting blacklisted by EQC, which will make it hard to get private insurance.  

Impossible to know how many people have had their claims declined due to "fraud"

The other concerning thing about this case, is that we don’t know how many other vulnerable people have had their claims declined by EQC, further to being accused of committing fraud, or over an arguably immaterial issue like a heat pump.

EQC can’t confirm how many quake claims it declined due to “false” heat pump applications.

Nor can it confirm how many of the 469,456 claims in received for the 2010/11 quakes were declined due to fraud. It says it doesn’t categorise its declined claims according to why they're rejected.

EQC can however confirm that it declined a total of 146,838, or 31%, of Canterbury quake claims.  

As well as being declined for being below excess, duplicated, incomplete, false, etc, it says some of these claims were withdrawn or closed for administrative purposes.

Yet without EQC revealing how many claims were declined for what reasons, it’s impossible to know whether the issues experienced by Hooker’s client are widespread.

I find it hard to believe EQC doesn’t have these breakdowns. And while it’s likely a private insurer would keep this sort of information close to its chest for commercial reasons, one would expect a government agency to be more transparent.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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9 Comments

The method by which the heat pump was supplied was deceptive and that's EQC's fault. There are more instances of this.

People should be wary on any EQC claims as they will try to minimise the payment in an attempt to rip you off. For a simple slip I had to fight with detailed evidence to get them to reevaluate and then double my payout. Treat any dealings with EQC as if they are attempting to defraud you.

You should also be concerned with their unethical dealings with the elderly.

Unless 'Ms Jones' is willing to provide her name to EQC, it is impossible to make a judgement one way or the other on her assertions.

EQC should have a recording of the phone conversations from which more could hopefully be learned about what she said but she is playing coy. Despite being allegedly unjustifiably smeared with a fraud accusation and rendered uninsurable.

If she knowingly fibbed to get a benefit she wasn't entitled to when so many others in dire need were patiently waiting, then she has got what she deserved. If however she was unsure and just making a genuine enquiry with no intention of getting something she knew she wasn't entitled to and things evolved from there, then EQC's response is a disgrace.

It is curious that Ian 'I pledge EQC will do better' Simpson, didn't do his usual mea culpa and wade in, instead passing the query to a minion to look into. Could indicate a number of things including mind on a new job but might also be because EQC considers it is on firm ground so a hand off to bad cop is the chosen option.

Jenée- I don't see how you arrive at your conclusion that - ' Looking at (ei) and (f), the woman couldn’t have given a ‘wilful’ misdescription of her property ' - simply because 'she was (allegedly) never asked to provide any description of the type of heating she had in her home'. She could have been well aware she did not qualify and deceptively misdescribed her situation, without having been asked any questions and the claim handler accepted her story at face value. It is still fraudulent.

Andrew Hooker portrays an 'old and exhausted' person with whom we immediately empathise. And she could well be so and deserving of our support. But it is also possible she's cunning and manipulative. We just don't know.

She needs to identify herself to EQC ( although they probably already know) and agree to a release of the phone conversation, to settle this one way or the other.

Hi Middleman, 

You are right - we really need the woman to disclose her name, and EQC to be forthcoming, so we can get all the facts straight. 

Nonetheless, I believe that if (according to Andrew Hooker)... 

"No one had asked her if she qualified or even told her, when she called, what was needed to qualify. She rang to enquire about whether she was entitled to one, and next thing, one was installed."

...Then the woman hasn't committed "fraud". Rather EQC has been sloppy in its processes. 

Anyway, fraudulent or not, I still question whether denying someone's entire quake claim over a "false" heat pump application is taking things too far - especially for a government insurer. 

Yes, if Hookers account is the full story, then EQC is way out of line in asserting fraud.

Your point about denying a claim for additional damage or loss that is unrelated to a fraud, is a difficult one.

That fraud voids a policy from inception is a contractual, and in intentional situations justified, reality but I've also been involved in cases where the outcome of a thoughtless misstatement, has been inequitably disproportionate.

Under your alternative scenario of insurers still paying for 'genuine' non fraudulent damage or loss but declining the portion of the claim that is fraudulent, a distinction would need to be made on the quantum that attached to both categories. Generally simple in the case of an earthquake but where lies about the circumstances occur in, say, a theft claim, it is very difficult to establish an apportionment between both.

And why would you not 'try it on' if there were no consequences for the part of your claim that is genuine?

Can of worms

Don't the police get involved in cases of insurance fraud and prosecute? Its their job to punish people for fraud, not the insurance companies.

Hard to get them interested. Virtual fait accompli presented to them on a plate and they sometimes are.

Standard of required proof is very high for a criminal fraud prosecution to succeed.

Do believe that as a well noted, versed, successful and reputable litigation lawyer that Mr Hooker is not in the habit of risking either his credibility or reputation by going public on all of this with a set of facts that cannot be substantiated. In other words Mr Hooker is not of a mind to publish baloney. Therefore the facts are the facts whether it is Jones, Smith or just plain Doe! Believe there are hundreds on thousands of similar instances well beyond just this scenario here about heat pumps of EQC taking action which is punitive and in some cases, pure persecution.
This example here illustrates that as the author of the article fairly and squarely explains. If an elderly person makes a genuine mistake, and given there was confusion over the information that was exactly required, and not even sought by EQC, then why the draconian vindictive reaction from EQC. This is a public service outfit, there are rules of engagement and conduct enshrined. What sort of mission statement is hanging on the walls of this organisation? What sort of culture is embedded here, that allows this sort of behaviour to go unchecked. It reminds sadly, very sadly in fact, of the culture exposed by Rodney Hide, of IRD. A cartoon hanging up in the office, of a taxpayer, skewered on a meat hook.

Hooker is an advocate. It's his job to present scenarios that support what his client has told him occurred. I don't doubt he genuinely believes her story and as you indicate, he is an astute judge of situations. But the reality is he has not had the opportunity to examine EQCs records of the discussions, given he has not been allowed to identify the claimant to them, so will not have been able to conclusively verify one way or the other if Ms Jones is telling the truth, or the whole story.

Hooker is an officer of the court. He would not have made those statements without being prepared to back them in a court of law. He has a million times more credibility that EQC, who have many times been, er, less than honourable.