A recent ruling by Ontario's Superior Court has quashed a proposed class action against 15 insurers for improperly deducting HST from Statutory Accident Benefits Schedule (SABS) payments. An appeal is forthcoming.
In this blog, I explain how we arrived at this point and what's on the line.
A Wrongful Deduction
In 2018, numerous class action lawsuits were filed by car accident victims alleging their insurance providers had wrongfully deducted HST from SABS payments.
It was alleged that the defendant insurers implemented adjusting policies that wrongfully shortchanged the insureds. Although the amounts deducted for most individual SABS recipients did not add up to a large sum, the principle of the matter and the systemic conduct - insurance companies keeping money that didn't belong to them - needed action.
The Ontario Trial Lawyers Association (OTLA) first brought the matter to the Financial Services Commission of Ontario (FSCO), the organization responsible for monitoring insurance provider practices. Although FSCO was aware of these unlawful deductions and had informed insurance providers of the issue, most insurers continued the practice.
The Ontario government amended the SABS in June 2019 to make clear that insurers can no longer reduce SABS entitlements or amounts using HST. However, the issue of the earlier wrongful deductions was not covered in the legislative change. As such, millions of dollars in past deductions are still in insurers' hands instead of accident victims' hands.
The Superior Court Decision
Despite acknowledging that "the class action was designed for this very purpose," Ontario Superior Court Justice Edward Belobaba ruled that, according to Ontario's Insurance Act Section 280 (3), the province's Licence Appeal Tribunal (LAT) has exclusive jurisdiction over auto insurance claims related to accident benefits. In other words, the LAT is the only forum that can hear disputes involving the SABS and therefore, the proposed class action cannot go forward in the Superior Court of Justice.
The inherent problem with proceeding in the LAT is that each claim amounts to less than the $100.00 filing fee mandated by the LAT. There is a concern about the inconsistency of results when proceeding in front of different adjudicators at the LAT.
Besides the fundamental impracticality of requiring that each claimant pay more to advance a dispute than they will recover, the sheer number of claimants seeking to recoup these deductions will flood and clog up the LAT (where class actions are not permitted).
Where Do We Go From Here?
Justice Belobaba did permit the class action to proceed against FSCO. The action alleges that the regulator neglected its obligations to act on complaints from consumers. However, if the decision on jurisdiction stands, thousands of accident victims will have little or no recourse to achieve justice.
Lawyers acting for the proposed plaintiff classes allege that the insurers are attempting to use consumer protection legislation as a shield to avoid accountability and withhold profits that they obtained through unfair practices.
They point out that the class action does not seek to resolve an individual's entitlement to specific SABS benefits. The insurers' unfair practices used the SABS as the channel to unjustly enrich themselves at the expense of their insureds.
Whether someone's portion of this potential class action award/settlement is small or large, Gluckstein Personal Injury Lawyers believes it is important to hold insurers accountable for their conduct. We will continue to support access to justice for past SABS recipients who had HST unfairly deducted from their benefits. We are committed to our clients – past and future.
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