The Toronto Transit Commission (TTC) has plans to file a $5 million lawsuit against
Manulife Financial, alleging that the insurer was ill-equipped to both detect and deal with the benefits insurance fraud scheme the public transport agency is currently mired in.
Yesterday, the agency announced its intent to proceed with a claim in the Ontario Superior Court of Justice, which was originally filed last year.
“The TTC alleges that Manulife Financial did not have appropriate fraud management controls in place nor were there systems in place to detect and analyze unusual trends or patterns that might indicate fraud or abuse,” a release from TTC said.
“The TTC maintains that Manulife breached its duties of care, which contributed to the losses suffered by the TTC and, thus, the public.”
TTC has asked Manulife to officially respond to the lawsuit within three weeks.
“Manulife takes fraudulent insurance claims seriously,” Manulife spokesman Sean Pasternak told Toronto Star. “Manulife works with policyholders, law enforcement and others in order to detect and prevent fraudulent activity for the benefit of our customers.”
Following a tip that suggested employees were making claims to a company called Healthy Fit for orthotics, braces, and other medical devices, the TTC launched an investigation in 2014.
It was found that none of the devices or services claimed were provided. In some cases, the costs of the claims were deemed to have been inflated. Healthy Fit, the employees involved in the scheme, and their eligible family members all allegedly split benefits payouts totaling about $4 million.
Last week, Healthy Fit proprietor Adam Smith pleaded guilty to two counts of fraud over $5,000; he was sentenced to two years in a federal penitentiary.
To date, 170 TTC employees have been fired, resigned, or retired early to avoid dismissal in relation to the benefits fraud scheme. TTC said that 10 former employees face criminal charges. The agency’s investigators continue to interview employees.
Related stories:
Ten charged in relation to TTC benefits fraud
TTC employees fired in relation to alleged insurance fraud scheme
