The Toronto Transit Commission says it has now settled a lawsuit against its former benefits administrator Manulife over its alleged failure to detect a benefit fraud scheme that has resulted in ten criminal convictions and the removal of more than 250 TTC workers from their jobs.

The TTC filed suit in 2016, alleging Manulife failed to “prevent, or to detect in a timely way,” an effort involving Adam Smith, the owner of an orthotics business called Healthy Fit, and hundreds of TTC employees who filed claims for orthotic devices they did not actually need.

The items claimed included approximately $5 million worth of compression stockings, sleeves and orthotics, as well as therapy services, the TTC said in 2017.

The orthotics business and the employees would split and pocket the insurance payments received for the phantom devices and claims for services that were never actually rendered, police allege.

An anonymous tipster blew the whistle on the scheme in 2014, the TTC said.

Smith pleaded guilty to two counts of fraud over $5,000 in Sept. 2017 and was sentenced to two years in prison.

In the year after the fraud was quashed, the TTC said it saw $5 million less in benefit claims by its employees, and has saved a total of $7 million annually in the years since.

The terms of the settlement with Manulife were not disclosed. The TTC later changed its benefits provider in response to the scam.

“To date, 254 TTC employees have been dismissed — or have resigned or retired to avoid dismissal with an additional 14 disciplined,” the Commission said Wednesday.

Nine of those who retired or were dismissed were also convicted criminally.

In 2016, Toronto’s auditor general estimated that as many as 600 TTC employees could have been involved in the benefits scheme at one point or another.