Six auto insurance giants have withheld hundreds of millions of dollars in HST payments from Ontario car accident victims in defiance of repeated demands from the provincial regulator, according to a series of class-action lawsuits — obtained exclusively by the Toronto Star — claiming $600 million in damages.
Since the HST was introduced in Ontario in July 2010, Intact, Aviva, Unifund Assurance, belairdirect, Certas Direct and Allstate have engaged in “unfair practices,” the lawsuits allege. They say companies did not pay or reimburse HST on medical benefits in some cases, while in others they included HST in calculating a claimant’s benefit limits — all in violation of repeated regulatory direction.
Each of the companies is accused of “preferring its own profits ahead of … the well-being of (claimants) who suffered loss or injuries” in auto accidents.
“Anyone who buys insurance from these companies are being gouged,” said Paul Harte, who is among a group of lawyers representing plaintiffs in the lawsuits. “They’re paying for coverage that the companies have no intention of paying.”
The six class-action suits, filed in court Wednesday, have not been certified and their claims have not been tested in court.
The Star sent interview requests to each of the six named insurance companies. Spokespeople for Intact, belairdirect, Certas and Unifund Assurance declined to comment, and Allstate did not respond.
Avivia spokesperson Fabrice de Dongo declined to comment on the lawsuit allegations but said, in a written statement: “Aviva has followed the industry position on HST being included within the maximum benefit amounts … and continues to support this interpretation.”
The Star has obtained a Sept. 26 email from an Intact claims representative to a client’s paralegal suggesting the company may already have acknowledged HST should not factor into benefit limits.
“Our system has been modified so that HST no longer shows as coming out of the limits,” the email reads.
The Insurance Bureau of Canada, which represents the industry, declined to comment because the case is before the courts.
The lawsuits also take aim at the provincial government for “deliberately turning a blind eye to the wrongful conduct … in fear that (insurance companies) would in retaliation increase rates … at a time when the government of Ontario had promised a reduction in rates (and) stop providing hundreds of thousands of dollars in political donations to the then-governing party.”
The Financial Services Commission of Ontario (FSCO), which regulates and licenses Ontario’s insurance companies, is named as a defendant in the claims for failing to ensure the “government-designed, mandatory insurance was operated fairly.”
FSCO spokesperson Malon Edwards said the regulator is reviewing the allegations and will issue a statement Thursday.
Between June 2010 and June 2016, FSCO issued a dozen bulletins and guidelines to the industry, which included direction on the HST issue.
“If the HST is considered by the (Canada Revenue Agency) to be applicable to any of the services or fees listed in this Guideline, then the HST is payable by an insurer,” reads a July 2010 bulletin on medical benefit payouts.
A 2015 guideline makes clear that HST should not be considered part of the benefit limits for statutory accident benefits (SABS).
“The HST is a tax and is not part of the benefit limits set out in the SABS,” it reads.
Jill Nicholson, the lead plaintiff in the Unifund lawsuit, still becomes emotional while describing the accident six years ago that crushed her leg between her motorcycle and a trailer at an Ottawa-area intersection. She watched as firefighters collected pieces of bone from her left leg off the pavement.
Since then, she has needed extensive medical, rehabilitative and psychological services to deal with eight fractures. She was removed from her job as a border services agent and relegated her to a desk job because she could no longer meet the physical requirements to possess a firearm, she said in an interview.
“I didn’t know … that I was being improperly charged for those medical services,” said Nicholson, who sometimes walks with a cane or uses a wheelchair, and can no longer ride a motorcycle or complete basic household tasks. “All of that (HST) money could have been used for my treatments. But it’s long gone … I’ve basically used all my (benefit) money now.”
Catherine Brooks, the lead plaintiff in the Intact suit, was in the passenger seat of a 2007 Dodge Charger when the car was rear-ended in February 2015 in North Bay. Her injuries left Brooks, 56, with chronic neck pain radiating into her left arm as well as vision problems and “psychological impairments.”
When she applied for benefits the following month, Intact approved her claim, the statement reads, but reduced her medical and rehabilitation benefits by the amount of the HST owed on those benefits. One treatment plan totalled $2,200 in treatments — which “wrongfully” included $286 in HST, the claim states.
“If they don’t have a right to it, they shouldn’t have it,” Brooks said in an interview. “They just go ahead and do these things and seem not to be accountable.”
In recent emails to plaintiffs’ lawyers, two Aviva claims specialists dismissed FSCO’s position on insurers paying HST on benefit claims as “incorrect.”
Using identical language, the emails state that the “interpretative bulletins issued by FSCO … are not binding on a tribunal or court, although such a body may consider them in arriving at its own conclusion … In our view, these bulletins do not operate to create or change the law.”
In a case heard by the Licence Appeal Tribunal in February, adjudicator Anita Goela ordered Aviva to pay HST in addition to the benefit and directed that it was not permitted to include the amount of HST in the benefit limit.
“If the HST is considered by the (Canada Revenue Agency) to be applicable to any of the services or fees … then the HST is payable by an insurer,” the decision states, citing FSCO’s guidelines.
In another Licence Appeal Tribunal decision last year, adjudicator Ian Maedel wrote: “It has long been FSCO’s policy that HST is payable in addition to any rehabilitation benefit.”
Last year, Shawn Taylor was an active runner and snowboarder. Today, the 18-year-old Wasaga Beach resident is a quadriplegic who cannot move his hands and fingers or control his bladder or bowels.
He was a passenger wearing a seat belt in a car that rolled it several times. Taylor now requires around-the-clock care, for which he receives $6,000 a month.
“It is Aviva company position that the $6,000 per month is inclusive of HST,” reads a January email from an Aviva claims analyst written to one of Taylor’s caregiver agencies.
His lawyers say that $6,000 should not include HST.
In just over a year, Taylor has already gone through more than $250,000 of his $1 million benefits limit, including home and car renovations to accommodate his physical needs. Those bills have included thousands of dollars in HST that Aviva has improperly deducted from his available benefits, the lawsuit alleges.
At this rate, he will be out of provincial benefits in five years.
“There’s not a lot of options there for us,” said Rhonda Taylor, Shawn’s mother. “Do we lose our house? … I couldn’t believe how much money Shawn will lose.
“What is clear is that many insurers have no intention of complying with the direction of the regulator and there is no indication that the regulator has any intention of ensuring that these insurance companies comply,” said Harte.
FSCO officials have been aware of issues with the payment of HST by insurance companies for years, according to documents obtained by the Star.
A 2015 complaint from health professionals who treat accident victims asked FSCO to take action on “a lack of fair and appropriate payment of HST … We would encourage increased education and oversight of insurers to ensure that they are complying with this requirement.”
In June 2016, the Ontario Trial Lawyers Association, which represents about 1,000 lawyers who represent clients in auto accidents, wrote to FSCO about a “concerning an alarming practice of some Ontario insurance companies who wrongfully deduct HST from the available medical and rehabilitation limits for injured accident victims.”
The letter asked FSCO to take “every reasonable additional action, and seek every available remedy, as required to compel compliance with, and to prevent insurers from so callously ignoring the (regulator’s orders).”
A response letter from FSCO superintendent and CEO Brian Mills, who is personally named in the six lawsuits, said the regulator was monitoring the issue and that change was forthcoming.
“Those insurers who, to FSCO’s knowledge, have failed to pay HST in addition to the cost of a benefit, have indicated that they will follow the direction set out (by FSCO) in the future,” the letter said. “FSCO will continue to convey this message regarding the HST should any further issue arise.”
More than two years later, the practice remains common, the lawsuits allege.
“FSCO took no or insufficient steps to stop the wrongful conduct,” the statements of claim read.
Ron Bohm, president of the Ontario Trial Lawyers Association, said class-action lawsuits are the only way to give accident victims a chance at receiving “access to justice” when they are facing insurance companies with billions of dollars in assets.
“There’s been a certain amount of incredulity that it has continued,” Bohm said in an interview. “It’s nickel and diming, but when you add it up they’ve really taken a lot of money out of the pocket of these people.
“It’s offensive … It’s pure bottom-line profit greed.”
Robert Cribb is a Toronto-based investigative reporter. Follow him on Twitter: @thecribby