Kitec claimants frustrated by delays in class action payout

Heather Crocker has been waiting seven years to learn how much she'll be reimbursed for the $9,000 she paid to replace Kitec plumbing in her former Dartmouth, N.S., home.

Some 1,800 kilometres away, Carl Mascarenhas of Toronto hasn't yet received a penny for his $17,000 claim made in 2014 to replace the Kitec in his townhouse.

One of the lawyers involved in a class action over the product tells CBC News the pandemic, a flood of claims before the deadline, as well as civil unrest in Louisville, Ky., where the claims administrator's head office is located, are to blame for the delay in disbursing funds.

It's been almost nine years since Canadian and American courts approved a settlement worth $125 million US in a class action lawsuit over Kitec plumbing fixtures and pipes. 

An unknown number of Canadians, like Crocker and Mascarenhas, still don't know when — or if — they will be compensated for the thousands of dollars they've paid to replace plumbing systems.

The settlement included $25 million US for legal fees, notices and other administration, leaving $100 million US plus interest to pay claims for damage caused by leaks and floods and replacing the fixtures and pipes. At the time, Gilardi LLC was appointed as the claims administrator, although it was subsequently acquired by another company.

The Kitec plumbing system was widely used in the late 1990s and early 2000s before it was recalled due to deteriorating fittings and pipes.

Kitec, billed as a cheaper and easy-to-install alternative to copper piping, was used primarily in hot water baseboard and in-floor heating systems. The product may also have other brand names, including PlumbBetter, IPEX AQUA and WarmRite. It can be identified by its bright orange and blue piping.

Long claims period frustrating

The window to file a claim was open for eight years and didn't close until January of this year.

Crocker, who now lives in Eastern Passage, N.S., applied in 2013. She had no leaks or water damage and said she was told people who experienced damage would be paid first. She received a cheque for $247 and was told at the time she might receive more once the claims period ended. She started checking after that.

"I first called in January, then again in March and early September," Crocker said, noting she always gets the same story that they're processing claims.

"It seems very, very slow. They've had my papers for seven years and they're all correct. It just makes you wonder why it's taking so long," Crocker said, adding the $9,000 she paid to replace the Kitec "is a lot of money." 

"I'm sure there's lots of people out there just like me," she said. 

It's estimated 292,000 North Americans had Kitec in their homes. Lawyer David Robins, one of those handling the Canadian case, said 20,000 claims were filed by the time the claims period ended in January. It's unknown how many were Canadians, but $25.5 million US has been approved in partial payments to Americans and $47 million Cdn to residents of Canada.

Unlike Crocker, Mascarenhas is still waiting for his first cheque after filing his claim in late 2014.

"I have received no compensation nor to my knowledge did any of my fellow condo corp. members, and at this point there is no indication of whether we will get any portion of that back," he said.

'It's like a black hole'

He said the settlement administrator has acknowledged receipt of his claim.  

Mascarenhas started calling routinely after the claims period ended and was told twice to call back in two months. He said he didn't fare any better in his most recent call when he was told there was no further information.

The call centre representative was unable to give him a date when claims might be paid out, he said.

"It's like a black hole," said Mascarenhas. "I'm free to call or check the website, which seemingly never changes, and that was the extent of it."

Mascarenhas called his experience "a never-ending story" and said he is beyond worn down. His condo corporation, worried about significant damage to multiple units because of a single leak, gave him little choice but to replace the system.  

"Now I'm kind of getting angry with the process and angry at this particular claim," he said.

Both Mascarenhas and Crocker have never been involved in a class action before and both are disillusioned by the process and the lack of information about when or whether they will be compensated.

"I think that if people were to know that this was a common pattern in class action lawsuits, they would probably second-guess whether they want to participate because definitely the effort of finding out the status and then hopefully getting to a settlement is far more frustrating than it is worth," Mascarenhas said.

Crocker said there's been no communication unless she initiates it.

"It just makes you wonder why it's taking so long and I've heard nothing from them unless I call," she said.

Several reasons for delay

Robins said all claims received before the deadline have been processed but the administrator is still waiting for information from some claimants.

Mike Dull, a class action lawyer who practises in Halifax and teaches a course at Dalhousie University about class action lawsuits, said most people have no idea about the logistics of class actions.

Class actions are "unique creatures," he said.

"And so class members, folks who are entitled to compensation under a settled class action, are often then subjected to a land of confusion."

Dull said many people don't even realize they're included in a class action. It only takes a few people to start one but when it's certified by the court, everyone with the same problem is automatically included. When a settlement is approved by the court, then individuals must file a claim.

He said dispersing class action settlements can take a long time because the money in the settlement can't be paid out until all the claims are filed. 

"Then the claims administrator is obligated to distribute the funds among the number of applicants, prorated to the degree that each claim is valued," Dull said about the Kitec settlement.

He said the Kitec eight-year claims window was "an unusually long time" although it's not unheard of. He pointed to the residential schools and hepatitis C class actions as examples of long claim periods, but noted those settlements weren't prorated like Kitec which he called "very unique."

Dull said judges approve all elements of class action settlements so the claims administrator doesn't get to dictate how long a claims period will be.

"They just follow the court's order and do what's asked of them," he said. 

The Kitec settlement stipulates if there are any funds remaining after all claims have been paid, they are to be returned to the companies that make Kitec and its insurers.

Robins said his hope "is to ensure class members are fully and fairly compensated for their losses to the extent that can be done."

Even though the maker of Kitec agreed to the settlement, it denied all allegations of fault, wrongdoing or liability by any of the plaintiffs in other actions against them.