Benefits fraud update: TTC files suit against Manulife Financial; 170 employees dismissed to-date

The TTC has filed a statement of claim in the Ontario Superior Court of Justice against Manulife Financial for up to $5 million as part of an ongoing investigation into an alleged benefits fraud scheme. To date, 170 TTC employees have been dismissed – or have resigned or retired to avoid dismissal – and 10 former employees are facing criminal charges for their part in the alleged fraud.

TTC Statement of Claim v Manulife

The statement of claim is attached and requests a response within three weeks. A statement of defence was not requested of Manulife at the time the claim was filed by the TTC 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. The TTC maintains that Manulife breached its duties of care, which contributed to the losses suffered by the TTC and, thus, the public.

In 2014, the TTC began an investigation following a tip to its 'Integrity Line' that alleged receipts were being provided to employees by Healthy Fit, a health care products and service provider, where claim reimbursements were being made, but where no product or service (orthotics, compression stockings and sleeves) was obtained or where receipt amounts were inflated. It was also alleged that Healthy Fit and the employee making improper claims would then share the money paid out by Manulife Financial.

This week, Adam Smith, the proprietor of Healthy Fit, pleaded guilty to two counts of fraud over $5,000 and was sentenced to two years in a federal penitentiary.

TTC investigators continue to interview employees as part of its own investigation. Where evidence shows the TTC’s benefits plan was billed inappropriately, demands for repayment are made and employees face discipline, up to and including dismissal.

In 2016, the TTC saw a reduction in benefits claims costs of almost $5 million over 2015, reflecting the TTC’s continued success in bringing an end to improper benefits claims or outright fraud.