Six Ontario automobile insurers have been named in a series of class-action lawsuits by accident victims who are seeking millions in benefits they say they were denied because the insurer improperly subtracted the harmonized sales tax from their benefits packages.
Lawyers for the class members are seeking an injunction to have the insurance companies cease subtracting the HST from payable benefits.
Collectively the lawsuits are claiming $600 million in damages.
The claim also accuses the Financial Services Commission of Ontario of turning a blind eye to the practice of the insurers after they were notified their policies regarding the HST were not being followed properly.
Acting for the insurance claimants is Paul Harte of Harte Law PC, Kevin Kemp of Kemp Law PC in Alliston Ont., and Jay Ralston of Murray Ralston PC in Barrie, Ont.
Harte says aside from the class action lawsuits the issue will require a response from the provincial government. He says it is a widespread industry practice and they are still investigating in order to add insurers to their list.
“You cannot sell auto insurance in this province without a licence from FSCO,” Harte says. “So, if the government wanted to stop this practice, they could stop it immediately by directing FSCO to take disciplinary action against the insurance companies that continue this practice and ultimately threaten their license to sell insurance.”
NDP member Gurratan Singh has expressed interest in the issue, says Harte, but he has not heard anything from the Liberal or Progressive Conservative Party.
“We certainly hope that the new government has a lot more concern for the little guy — the small individual that's injured in these accidents, because there are over 60,000 a year in the province that are injured,” says Ralston
According to an email from Teri Lehmann of Intact Insurance Company, which was part of a media brief provided by lawyers for the class action claimants, Intact modified their system so that HST no longer comes out of their customers’ benefits.
Ralston says Belair has also reimbursed some of their customers who were charged the HST.
In 2016, on behalf of the Ontario Trial Lawyers Association, then president Adam Wagman wrote to CEO and superintendent of the FSCO, Brian Mills, to alert him of the practice by insurers regarding the HST.
President of the OTLA Ronald Bohm says prior to that, members raised the issue within the OTLA.
“While individually they were often small amounts. It seemed like it was wrong, and it ought not to have been taking place,” he says. “So once we looked into it a little bit and realized that the concerns were well founded.”
Bohm says the FSCO told them they were aware insurers had been misapplying the HST, that they had contacted them and those insurers had ensured the regulator they would not subtract the HST from benefits in the future.
“Unfortunately, it appears to be a practice which has continued,” he says.
Bohm says that there is little chance for regular people to be successful when taking on institutions with billions of dollars in assets, outside of the class action process.
“We know that this class action and class actions in general are the only way that that the ordinary Ontarian with a small claim can possibly hope to gain access to justice against these huge, well-funded institutional defendants,” Bohm says.
In two 2017 decisions from the Ontario Licence Appeal Tribunal, Aviva was forced to pay the HST for injury claimants. In another Licence Appeal Tribunal decision, between an injured claimant and the Motor Vehicle Accident Claims Fund, adjudicator Ian Maedel wrote, “It has long been FSCO’s policy that H.S.T. is payable in addition to any rehabilitation benefit.”
Responding to Legal Feeds request for comment, Aviva said via email that they are seeking clarification from government on how the tax is applied to their customers.
“In fact, this is part of our commitment to continually explore ways to reduce or eliminate complexity for them, and to increase trust in the insurance industry overall. We exist to help our customers in their time of need,” said Aviva Canada spokesperson, Fabrice de Dongo.
As the issue is before the courts, de Dongo said it is inappropriate to comment on the details.
In an emailed statement, Sarah Kennedy, director of corporate communications for Royal & Sun Alliance Insurance Company of Canada, which controls Unifund Assurance company, said “As this matter is before the court we cannot provide comment.”
Certas Home and Automobile Insurance Company is controlled by Desjardins and their spokesperson John Bordignon told Legal Feeds via email, “We are in the process of reviewing the statement of claim and will be responding to it in due course. As these issues you reference may be included in the process moving forward I am unable to comment further. We do not comment or discuss pending litigation or matters before the courts.”
Intact’s Director of corporate communications and social media Stephanie Sorensen told Legal Feeds that as of publication, she was not aware that Intact had been served with a statement of claim and would have to review that carefully before providing any further information.
“Our first priority is to get our customers back on track when they face difficult times and we take our responsibility very seriously,” she said via email.
Belair Insurance Company Inc. and Allstate Insurance Company of Canada, could not immediately provide comment.
in a response to Legal Feeds request for comment, Malon Edwards, senior communications officer, Financial Services Commission of Ontario, said via email, “FSCO is aware of the statements of claim involving FSCO. As the matter is before the courts, FSCO is unable to comment further.”