Proposed class action lawsuits allege Ontario insurers broke payment rules

Vehicles makes there way into and out of downtown Toronto along the Gardiner Expressway in Toronto on Thursday, November 24, 2016. (THE CANADIAN PRESS/Nathan Denette)

TORONTO -- A series of proposed class-action lawsuits launched against major insurance companies in Ontario claim the firms have been shortchanging auto-accident victims for years by breaking rules that govern payouts.

Statements of claimed filed in the suits allege the companies did not pay or reimburse HST on benefits in some cases and included HST in the calculation of benefit entitlements in others -- all in violation of rules set up in 2010 when the tax combining the federal goods and services tax and the regional sales tax was introduced.

"The insurers shortchanged thousands of auto-accident victims, reducing care benefits to injured individuals to boost already record profitability," lawyer Paul Harte, who is part of the team that filed the legal action, said Thursday.

Insurance companies Aviva, Intact, Belair, Allstate, Unifund and Certas are named in the suits, which contain allegations that have not been proven in court.

The legal action also alleges Ontario's insurance regulator -- the Financial Services Commission of Ontario -- has known about the HST issue for years but has failed to take action against it.

"They're responsible for protecting the public and policing the industry," Harte said. "The claim alleges that FSCO turned a blind eye to unfair industry practices even when they knew that members of the insurance industry were wrongfully denying the public benefits."

According to the lawsuits, the insurance regulator directed insurance companies to pay applicable HST in addition to the costs of goods and services provided under accident benefit agreements, and told them not to include applicable HST within calculation of caps on benefits.

The lawsuits seek a combined $600 million in compensation and an injunction to prevent further alleged breaking of the rules around payments of the HST.

Harte said 60,000 injuries occur every year in Ontario as a result of vehicle accidents. And while six companies are named in the series of lawsuits, the alleged issue could be more widespread, he added.

Jill Nicholson, a 34-year-old Ottawa resident who works in law enforcement and is a plaintiff in the legal action, said she was involved in a serious accident while riding her motorcycle home from work in June 2012.

Over the past six years she has had six surgeries and exhausted the benefits available to her through her insurance, she claimed. Her lawyers alleged her insurer had not paid the HST on her benefits as they should have and deprived her of needed money for treatment she still requires.

"As I've run through all my benefits to this point, I no longer see a psychologist and I only see a massage therapist minimally so that I can afford to continue going," she said. "However, I suffer from chronic pain so every day that I don't get therapy is just more pain added to me for the next day."

A spokesman for Aviva said the company has sought to clarify rules around HST with the government.

"This is part of our commitment to continually explore ways to reduce or eliminate complexity (for customers), and to increase trust in the insurance industry overall," Fabrice de Dongo said in a statement.

Intact Financial, which owns both Intact and Belair brands, said to its knowledge, as of Thursday evening, it had not been served with the statement of claim.

"Our first priority is to get our customers back on track when they face difficult times and we take our responsibility very seriously," the company said in a statement.

"If served, we would review the statement promptly and carefully before providing any further information."

Certas and Unifund said they couldn't comment on the legal action as it was before the courts while Allstate did not immediately respond to a request for comment.

A spokesman for the Financial Services Commission of Ontario said the agency was aware of the lawsuits but couldn't comment on them as they were before the courts. Finance Minister Vic Fedeli, whose ministry oversees the agency, also declined to comment.