People who sought compensation from the city for damage caused by potholes, flooded basements and fallen tree limbs were told an investigation took place when none occurred, an investigation by Toronto's ombudsman has found.

Ombudsman Fiona Crean said residents get "shockingly bad service" when they file third-party liability claims against the city because investigations aren't completed or as thorough as promised, are sometimes dropped without notice and they drag on for too long, leaving claimants frustrated and angered.

"What I'm really saying to the city is you need to treat people fairly," Crean told CP24's Stephen LeDrew.

Crean is taking the city to task after her office spent 14 months looking into how the city handles small claims (under $10,000 in damage) for potholes, sewer back-ups and fallen tree limbs following a steady stream of residents' complaints about the city and McLarens, its adjuster, which is now known as Granite Claims Solutions.

Many claims automatically turned down

Crean's report, released Wednesday and titled "Potholes, Floods and Broken Branches: How the City Handles Your Claims," found more than 90 per cent of all claims are denied, and many are automatically turned down because of the city's procedures.

In her report, Crean cites the case of one man who filed a claim over pothole damage.

On the day he filed the claim, the man was sent a letter stating the claim was being denied following an investigation, but no investigation occurred, Crean said.

Most claimants aren't aware they are required to prove negligence in their case.

"The city must tell them they have to do that," Crean said.

City to make changes

Because of the investigation, the city has agreed to make changes to improve the handling process and sharing of information with the public, she said.

In fact, Toronto Mayor Rob Ford issued a public statement late Wednesday afternoon thanking Crean for "shining a spotlight on this serious issue."

"When I served as councillor, I had many residents calling me to complain about the third-party liability claims process," Ford said. "The city manager now has very clear recommendations which he has already accepted. Customer service excellence is a priority for my administration and this report helps put us on that path."

The report also found:

  • - Adjusters routinely deny pothole damage claims, claiming road maintenance has met minimum standards but "do not investigate if this is true"
  • - City staff have taken more than a year to respond to McLarens' requests for additional information
  • - The city and adjusters hold back information from claimants
  • - If claimants don't maintain contact, adjusters will close their files without notification, even when they promised to give furhter information

"The city promises the claims will be handled with fairness, transparency and timeliness, but my office's investigation found this to be misleading," Crean said in a news release.

She later told reporters the city must stop promising things it can't deliver.

Cases drag on for 14 months

Crean said some claimants waited 14 months for a response from the city, while others didn't receive a response at all.

McLarens is paid a flat rate of $195 for handling each claim, and that discourages anything more than minimal effort, the report stated.

City officials believe more claims would be filed if additional information is given to the public, but "other municipalities give the public realistic information with no increase in claims and resulting in greater efficiency and less public frustration," Crean said.

In addition to finding problems within the system, the report contains the following recommendations for the city to improve the claims process so that claims are investigated properly and tracked:

  • - Inform the public if claims are automatically denied without an investigation and stop providing claimants with misleading information
  • - Create a service standard to ensure a proper review takes place and provide a copy of the service standard to Crean's office and McLarens
  • - Review the information given to claimants to make sure it includes an explanation of third-party liability, criteria, processes and the timeframe of a decision; provide a copy of the information to Crean's office and post it on the city's website
  • - Review the system for requesting reports and establish service standards, review the template request forms and the way data on report requests are collected, stored and tracked, and provide results of the reviews to the ombudsman's office
  • - Review the way claims involving contractors are handled to make sure claimants receive contractor information promptly, ensure claims against contractors are tracked and to ensure the city is more involved in the contractor's response to claimants