Note: This article is subject to legal complaint by MVD Law Professional Corporation.

The TTC is suing a Scarborough personal injury law firm for more than $1.5 million over allegations it defrauded the transit agency for 10 years by systematically doctoring benefit claims made by victims of collisions involving buses and streetcars.

According to a statement of claim dated Jan. 24, 2017 and filed by the TTC and its in-house insurance company, the transit agency alleges the Law Offices of Meleni David falsified records to claim payment for expenses for home care, housekeeping, and other services that were never actually provided to accident victims.

An attorney representing David declined to comment on the allegations when reached by the Star on Tuesday. According to a statement of defence filed in April 2017, David, her company, and an employee named as a co-defendant “deny that they engaged in an unlawful scheme” and “strictly deny that there was an unlawful scheme being practiced” at the firm.

The defendants also charge the damages sought by the TTC are “excessive, exaggerated and remote,” and ask the court to dismiss the case.

The TTC alleges it has found evidence of fraudulent claims related to 13 of the firm’s clients, who were involved in accidents that occurred between 2005 and 2014. The payments the TTC made in the 13 cases totalled $654,553, but the agency didn’t specify how much of that it believes is tied to allegedly fraudulent claims.

According to the TTC’s statement of claim, the agency became suspicious in 2015 when it found falsified documents in a claim handled by David’s firm, which advertises “TTC Accident” as one of its areas of expertise.

A former legal assistant at the firm later admitted in court filings to forging signatures on invoices for home care for one accident victim, but said he did so without David’s knowledge. The assistant, who the TTC is also suing in the same case, filed a statement of defence in which he said he wasn’t involved in any other of the allegedly false claims, and denied “any involvement in the unlawful scheme” outlined by the TTC.

According to David’s statement of defence, she had no knowledge the assistant had forged signatures and she fired him as soon as she discovered the “inappropriate invoice handling.”

The TTC says the discovery of the problems in that file prompted its in-house insurance provider, which is known as the TTC Insurance Company Limited, to review other claims David’s firm had handled.

“More than fifty per cent of the files audited contained demonstrably forged invoices,” the TTC alleges in its claim.

The agency charges that David and her employees operated the scam by having claimants sign blank invoice forms for housekeeping, home care, or other services.

The firm would allegedly then either obtain or fabricate the signature of a person who was supposed to be supplying the service, and submit the invoice to the TTC’s insurance company for reimbursement.

The TTC alleges some of the expenses may have been legitimate but that David’s firm would fabricate subsequent invoices by “copying, cutting and pasting and/or completing details on a blank form with a signature on it.”

As part of its investigation, the TTC determined that “it appears that most claimants have stated that they did not receive most of the services” for which the firm had submitted paperwork.

The insurance company also contacted caregivers and other service providers, some of whom reported “that they had not performed the services for various claimants” represented by the firm, according to the statement of claim.

The TTC alleges that the firm had a particular interest in “maximizing” the benefit payments because in addition to receiving a portion of clients’ one-time accident settlements, the company’s retainer entitled it to 25 per cent of ongoing benefit payments.

The TTC claims it is illegal for a law firm to receive a cut of ongoing benefit claims, which are supposed to reimburse the out-of-pocket expenses of accident victims.

David’s firm disputed that allegation, arguing in its statement of defence that it is “the practice in personal injury litigation” for lawyers to recover fees on a contingency basis.

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In addition to inflating the firm’s cut of benefit payments, the TTC claim alleges, the fraudulent caregiving invoices also created a paper trail that made it appear the accident victim had suffered serious and chronic injuries, which would lead to more lucrative one-time settlements for the firm and its client.

According to David’s defence, claimants “are not asked to sign blank invoice forms,” and “caregiver signatures are not fabricated, nor are subsequent invoices fabricated.”

The statement of defence asserts that aside from the claims the former assistant admitted forging, all other claims flagged by the TTC “were properly completed and submitted by the claimants and signed by the service providers themselves.”

The website for David’s firm describes her as a respected attorney who has received numerous awards related to her community service, including the Top 25 Canadian Immigrant Award and a citation from the National Ethnic Press and Media Council.

The TTC and its insurance company are suing the defendants for $1 million in damages for alleged negligence, conspiracy, breach of trust, and other claims, and $500,000 for aggravated, exemplary, or punitive damages.

According to its statement of claim, the TTC believes the scope of the alleged scheme may be wider than it has been able to uncover, and has asked the court to appoint an inspector to trace any funds the defendants may have unlawfully obtained through false claims, and to place a hold on any ill-gotten assets.

In addition to David and two named employees at the firm, the statement of claims cites 20 unnamed defendants listed only as Jane or John Does.

The TTC is the sole owner of the TTC Insurance Company Limited, and funds accident payments through the transit agency’s operating budget. In its claim it describes the alleged benefits scheme as “a fraud (on) users of the TTC.”

The alleged fraudulent accident claims scam is separate from the major health benefits scandal at the TTC, which has resulted in the dismissal, resignation, or early retirement of more than 200 employees since 2014.

In an emailed statement, TTC spokesperson Brad Ross said there “is no correlation” between that scandal and the alleged fraud outlined in the lawsuit against David’s firm.

He said the TTC’s insurance company has “numerous controls” in place to detect potential fraud, and in the David case, “those systems helped to identify a potential pattern ... which triggered an internal investigation.”

“The TTC is serious about fighting fraud” and will take legal action “when it is deemed appropriate,” he said.

Litigation in the David case is ongoing, no trial date has been set and none of the allegations have been proven in court.