Sep 01, 2020 in News Auto Insurance

Auto Insurance: Ontario Superior Court Throws Out Auto Insurance Class Action

In July, the Ontario Superior Court threw out a proposed class action insurance dispute lawsuit against numerous auto insurance providers over their handling of HST in accident benefits payouts. The claim, which sought roughly $1 billion in compensation, alleged that Economical, Allstate, Belair, Intact, Aviva, Unifund, Certas, The Commonwealth, Co-operators Echelon, Wawanesa, St. Paul Fire and Marine Insurance Company, Travelers, TD Insurance, Gore Mutual, and CUMIS withheld or deducted the harmonized sales tax in benefits payouts. It also alleged that the Financial Services Commission of Ontario (FSCO) failed to enforce provincial rules.

Background

Ontario's harmonized sales tax was introduced in 2010. At that time, the provincial government ordered auto insurance providers "to pay HST in addition to accident benefits and not to include HST in the calculation of any restrictions to benefits." In 2018, the proposed class action alleged that numerous insurance providers had failed to follow that directive, and that the FSCO had failed to enforce it. The alleged result was that many accident victims, including some dealing with catastrophic injuries, did not receive the full amount of accident benefits to which they were ennamed.

Damages

CBC News Toronto spoke with plaintiffs in the case in late 2018. It found that some accident victims had seen their benefits run dry, leading to acute physical and mental pain. One interviewee, Jill Nicholson, said that she lives with chronic pain and lingering psychological effects after a serious accident six years earlier. She no longer received accident benefits covering psychologist appointments. "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."

Superior Court Decision

Ontario Superior Court Justice Edward Belobaba threw out the case in July 2020, ruling that the claims against the insurers fell under the jurisdiction of the province's Licence Appeals Tribunal (LAT). The LAT has handled insurance disputes since 2014. "In my view, it is plain and obvious that the plaintiffs' claims against the defendant insurers fall within the exclusive jurisdiction of the LAT," Belobaba wrote in his decision, according to Canadian Underwriter. As a result of the decision, the plaintiffs will no longer be able to pursue mass action against the insurance providers. They may still pursue claims on an individual basis before the LAT. Belobaba's decision did not extend to claims against the FSCO - the plaintiffs are permitted to continue that action. "There is nothing in s. 280 of the Insurance Act or in the Court of Appeal's decision in Stegenga that gives exclusive jurisdiction to LAT over claims of regulatory negligence against a third-party government regulator," Belobaba wrote.

Conclusion

Although the Superior Court's decision is a blow to plaintiffs in the case, it reaffirms that any insurance dispute involving accident benefits must be handled before the LAT. Whether or not plaintiffs in the case decide to pursue their claims on an individual basis remains to be seen.

Contact Neinstein Personal Injury Lawyers

If you've been injured in an automotive accident in Ontario, contact Neinstein Personal Injury Lawyers today to schedule a free, no-obligation consultation with an experienced insurance dispute lawyer. Our team will ensure you get the representation and compensation you need to fund your recovery.   Image: Shutterstock