The Toronto Transit Commission has settled a 2016 lawsuit against its insurer for the alleged failure to detect a benefits fraud scheme involving orthotics store Healthy Fit Inc.

To date, 10 people — nine former TTC employees and Healthy Fit owner Adam Smith — have been convicted in relation to the scheme. More than 250 TTC employees resigned or retired to avoid dismissal, or were dismissed outright, while an additional 14 were disciplined.

“While terms of the settlement are confidential, the TTC is pleased to see this matter resolved in a way that allows both companies to move forward with a renewed commitment to preventing benefits fraud and penalizing those who commit it,” the TTC said in a press release.

Read: TTC benefits case: Store owner sentenced to two years, Manulife facing lawsuit

In 2016, the TTC sued its insurer Manulife Financial Corp. for allegedly not having appropriate fraud controls in place to detect unusual trends or patterns, seeking up to $5 million in damages for negligence, negligent misrepresentation and breach of contract for all losses incurred by the TTC.

The benefits fraud scheme involved Healthy Fit issuing receipts to TTC employees for either inflated amounts or without delivering a product or service. The orthotics store would then split the insurance payments with the customers. The TTC launched an investigation into the store in 2014 after receiving a tip on its integrity line. Toronto Police eventually charged 10 TTC employees for fraud over $5,000. Smith pled guilty in Sept. 2017 to two counts of fraud over $5,000 and was sentenced to two years in jail.

In July 2017, the Toronto Police Service also said Smith had similarly defrauded the City of Toronto in a scheme involving several city employees who submitted $96,000 worth of claims to Manulife.

Read: Toronto benefits fraud probe takes a turn as new charges laid over city claims

According to the agreed statement read at Smith’s sentencing hearing, Manulife paid out approximately $5.6 million in claims from TTC employees related to Healthy Fit between January 2012 and July 2015.

A 2016 report from the city’s auditor general said up to 600 TTC employees were under investigation for their involvement.

In the year following Healthy Fit’s closure, the TTC saw a reduction in benefits claims cost of almost $5 million. It has also saved almost $7 million per year in benefits paid for claims on orthotics, orthopaedic shoes, compression stockings and leg and arm braces.

Read: TTC fraud update: More than 220 employees fired or have resigned, retired

In a press release, Manulife said it’s continuing to strengthen and invest in its benefits fraud detection program. “Benefits fraud is a crime. It has serious consequences, including criminal charges and even jail time, as seen in extreme cases like this,” the insurer said. “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 is ongoing. “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.”

Read: Insurers stepping up fight against benefits fraud with analytics, big data