The Toronto Transit Commission and insurance company Manulife announced Wednesday they have settled a 2016 lawsuit related to a widespread benefits fraud.

Ten people were convicted in connection with the scheme in which employees submitted false medical claims through Healthy Fit, a business that provided orthotics, braces and other medical devices.

The owner of Healthy Fit, Adam Smith, was convicted of two counts of fraud over $5,000, with nine former TTC employees also convicted in a case that came to light as a result of a whistleblower complaint.

Hundreds of other employees were found to be involved. The TTC said 254 of its employees have either been dismissed or have resigned to avoid dismissal, while another 14 were disciplined for their actions.

Stuart Green, spokesperson for the TTC, said employees seem to have changed their behaviour as a result of this case.

"People now understand ... we're watching and they face real consequences if they're caught," he said in a phone interview.

Green said in 2016, benefits claims at the TTC dropped by almost $5 million dollars from the previous year,

TTC spokesperson Stuart Green says some types of benefits claims by TTC employees are down by $7 million per year since Healthy Fit shut down. (Paul Smith/CBC)

As well, Green said that since 2015, when Healthy Fit shut down as a result of this investigation, the TTC has saved almost $7 million a year in benefits paid for claims on orthotics, orthopedic shoes, compression stockings and leg and arm braces.

"Benefits fraud is a crime," Manulife spokesperson Shabeen Hanifa said in a news release.

"Fraudulent claims also impact the cost of providing benefits, which influences what employers can cover, and can hurt employees who are truly in need."

The TTC said its internal investigation continues and that terms of the settlement are confidential.