Class action lawsuits target insurance companies over 'unfair and illegal' HST calculations

Six of Ontario's largest insurance providers are facing a series of class action lawsuits, which allege that the companies withheld benefit payments to thousands of accident victims.

Lawyers representing the claimants say the companies have repeatedly refused to pay the harmonized sales tax (HST) on benefits awarded to those victims, despite clear orders from the Ontario government that the HST should be covered by the insurers.

They are seeking "millions of dollars" in damages and a court order stopping the practice.

"The named insurance companies decided to ignore the government and ignore the regulator," said lawyer Paul Harte. "Where they can, they've refused to pay HST and they've used the HST to lower benefits."

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The harmonized sales tax was introduced in 2010, at which point Ontario's insurance watchdog directed the companies "to pay HST in addition to accident benefits and not to include HST in the calculation of any restrictions to benefits," according to a website launched in support of the lawsuit.

Over the past eight years, the lawsuit alleges that six companies — Intact, Aviva, Unifund Assurance, belairdirect, Certas Direct and Allstate — engaged in "unfair and illegal" practices in relation to HST calculations.

The lawyers also say the Financial Services Commission of Ontario (FSCO), which regulates the insurance industry, failed to step in after repeated signs that HST rules were being broken.

"The lawsuits allege that the companies engaged in these unfair practices while the regulator, the Financial Services Commission of Ontario, sat idly by," Harte said.

The FSCO said it is aware of the allegations, but could not comment as the matter is now before the courts.

HST payments mean fewer benefits, lawsuit says

Jill Nicholson, one of the lead complainants, said her benefits have run dry six years after a devastating crash in which she was hit by a truck.

The lawsuits allege that she is one of the accident victims who have received lowered benefit payments.

Fighting back tears at the Queen's Park media studio, Nicholson said she lives with chronic pain and lasting psychological effects from the collision.

Her benefits no longer cover psychologist visits, she said, and she now only receives minimal massage therapy for her injuries.

"Every day that I don't get therapy, it's just more pain added to me for the next day," she said. "If I could continue going, I would."

Another complainant, Shawn Taylor, was rendered a quadriplegic after a collision last year. His family estimates that his benefits will run out in four years.

"Aviva is charging the HST and taking it off [Taylor's] benefits cap," lawyer Jay Ralston said.

In a statement to CBC Toronto, Aviva did not comment on specific details about the lawsuits, but said it was working to clarify tax payment rules.

"On behalf of our customers, Aviva Canada has actively sought clarification from the government regarding the tax treatment on claims payments to our customers," wrote spokesperson Fabrice de Dongo. "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.

CBC Toronto has asked the other five insurance companies to comment on the lawsuits, but so far has received no response.