Five more Ontario insurers face class actions over HST payments

Published: November 12, 2018

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Five more Canadian insurance companies are facing class action lawsuits for withholding medical benefit HST payments from car accidents. The five join six insurers who were originally subject to lawsuits for breaking Ontario’s regulations.

A report by the Toronto Star earlier this month highlighted lawsuits placed against Intact, Aviva, Unifund Assurance, belairdirect, Certas Direct, and Allstate. Following up, the Star reports Wawanesa, Co-operators, Economical, Commonwell, and Echelon are also facing legal action.

According to the investigation, the companies are accused of withholding hundreds of millions of dollars in Harmonized Sales Tax (HST) benefits payments from car collision victims. Each case is from Ontario and the companies are said to have ignored several calls from the provincial regulator to pay the costs.

The companies are believed to have engaged in “unfair practices” following the introduction of HST in Ontario during 2010. Courts argue the practice of avoiding HST payments is in defiance of regulations created by the Financial Services Commission of Ontario (FSCO).

In total, the 11 lawsuits are seeking $1.1 billion in damages, $100 million from each insurer.

Aviva Canada remains the only company to acknowledge the suits, saying it “has followed the industry position on HST being included within the maximum benefit amounts … and continues to support this interpretation.”

Intact Insurance has not discussed the case directly but did say during its Q3 financial report last week that the company is now making HST payments: “We can confirm that we are paying the HST and are not counting it towards the cap, as per current FSCO guidelines.”

Paul Harte, a lawyer working on the proposed class actions, says rules around HST payments are confusing and individual insurance companies have chosen to interpret them differently. He argues companies that do not comply may see customers leave them before any legal ramifications are handed out.

“We have learned that some auto insurance companies have been following the rules all along. Others, such as Intact, have acknowledged their error and have agreed to change their policies. A handful of companies, including Aviva, continue to shortchange their customers. The marketplace may decide this issue before the courts.”