As Hockey Canada faces widespread criticism over three funds it used to settle several sexual abuse complaints out of court, governance experts say it’s actually a “good business” decision for an organization to protect itself against non-insurable claims — though most can’t afford to do so.
In one case, Hockey Canada used these funds to settle a multimillion-dollar lawsuit after a complainant alleged she was the victim of a group sexual assault involving World Junior players in 2018.
CBC News informally surveyed a dozen national sporting organizations (NSOs), and none admitted to having similar funds.
Many NSOs are in the process of switching their complaints process to one provided by the Office of the Sport Integrity Commissioner (OSIC) and its Abuse-Free Sport Independent Complaint Office, although some still have their own internal reporting systems, or use independent third parties to deal with such claims.
Richard Powers, a lawyer and associate professor at the University of Toronto’s Rotman School of Management, says that though there’s “nothing the matter” with the existence of those funds — “it’s good governance and a very good business decision” — there are issues with “the transparency” about how fees paid by hockey families across the country were being used.
“That is really the critical factor here — and one of the things that they’re going to have to change moving forward, if they’re going to [attempt] to regain the trust of Canadians.”
Why does Hockey Canada have these funds?
Former Hockey Canada officials have confirmed the existence of the National Equity Fund and the Participants Legacy Trust Fund.
A third fund was discovered by former Supreme Court Justice Thomas Cromwell, who was commissioned to look into a controversial reserve fund used to quietly settle uninsured liabilities — including sexual assault allegations.
His interim report found the reserve fund is necessary, but he also uncovered serious flaws with how it has been handled.
During a July 27 parliamentary hearing, Brian Cairo, Hockey Canada’s chief financial officer, told MPs the equity fund was set up in 1995, because “some risks can’t be insured” by commercial liability insurance.
“It was recognized that there are just some unforeseen circumstances where claims are not insured, and you can think of Graham James,” Cairo said, referring to the former junior hockey coach who was convicted of sexually abusing players in the 1980s and early 1990s.
Of the nine claims paid out of the reserve fund for a total of $7.6 million, $6.8 million of those were related to the James case, Cairo said.
Hockey Canada has had sexual misconduct insurance coverage since 1998 and has used it to settle 12 sexual assault claims for a total of $1.3 million.
However, it didn’t use insurance to cover the 2018 case; money for that settlement came from registration fees paid by hockey families across Canada, stashed away in these three funds.
“There are times though, when the premiums get so high due to the number and size of claims, that you balance that against the cost of self-insuring,” Powers said, noting that doctors and lawyers sometimes pay into a self-insurance fund to cover medical or legal malpractice claims.
Sports ‘haves and have-nots’
While it may be good business practice, most NSOs can’t afford such funds — they’re just trying to survive, said Eric MacIntosh, a professor of sport management at the University of Ottawa.
“Wouldn’t it be nice to have a fund to protect against these unforeseen events? Ideally, yes,” said MacIntosh, who does research on culture and high-performance sport in Canada. He’s also a former junior hockey player and now coaches his own kids.
“In practice, I think it’s very difficult. Many national sport organizations in our country are underfunded, they’re understaffed. It’s a haves and have-nots in our Canadian sports system.”
Concordia University economics professor Moshe Lander says while he doesn’t know of any other NSOs with funds similar to Hockey Canada’s, he finds it hard to believe they don’t exist, since most sports carry similar risks of power imbalances between adult coaches and young athletes.
He said it’s also possible for organizations to confuse and distract the auditor general from discovering such funds. “There’s lots of ways that you can cover that stuff up,” he said.
“It really requires that it’s the victims that started coming forward saying ‘I was paid and I’m going to break my nondisclosure agreement because this is for the greater good. Go ahead. Sue me. Let’s see this in the public light.’ “
What other national sports organizations say
CBC News reached out to 12 other national sport organizations to find out if they have similar funds.
Soccer Canada was the only one that did not provide responses in time for publication, though a spokesperson said the request was in the queue.
Athletics Canada does not have and has not had, as part of its budget, a contingency fund for non-insurable liabilities, said Caroline Sharp, a national teams communications specialist.
She would not directly answer if Athletics Canada, the national organization for track and field athletes, has ever settled a case out of court, saying because the spectrum of what behaviour constitutes abuse or harassment is so broad — from comments that can be perceived as harassment, to conduct involving grooming and sexual assault — the process allows for “informal resolution.”
“Athletics Canada is not privy to the total number of cases that have been resolved through informal means,” she said.
Since 2015, complaints of violations of the organization’s Code of Conduct to Prevent and Address Maltreatment in Sport have gone through Athletic Canada’s Commissioner’s Office, which Sharp says operates “completely independently” from Athletics Canada.
As of Mar. 31, 2023, complaints involving Athletics Canada will go to the OSIC.
Baseball Canada is committed to Safe Sport and the safety of its members and is currently transitioning to the OSIC’s Abuse-Free Sport complaint process, media contact Adam Morissette said in an emailed response.
He did not reply to questions about whether Baseball Canada has settled cases out of court, if it has a contingency fund as part of its budget to cover non-insurable liabilities, and if so, if that fund has been used to cover allegations of a sexual nature, where the funds came from, or if it has insurance to cover allegations of sexual harassment or abuse.
Boxing Canada says it has not settled a case out of court in the last 15 years.
“We have no case or allegation on file before then which leads us to believe no case occurred before any of the present staff were in place or historically,” executive director Roy Halpin said in an email.
He said the organization does not have now, nor has it had, as part of its budget, a contingency fund from which to cover non-insurable liabilities.
It also does not have an insurance policy that covers non-insurable liabilities such as allegations of sexual harassment or abuse, according to Halpin.
“Canada Basketball does not have a contingency fund for non-insurable liabilities,” but does have abuse incident coverage as part of its general liability insurance policy, Matt Walker, director of communications and content, wrote in an email to CBC News.
“Canada Basketball has not been involved in any uninsured liability cases,” he wrote.
Basketball Canada is also transitioning to the OSIC Abuse-Free Sport complaint and investigation process, but Walker said it will keep its independent third-party reporting process in place, for matters not covered by the OSIC jurisdiction.
“Football Canada does not have a dedicated fund for non-insurable liabilities. To my knowledge, there has never been a payout regarding allegations of a sexual nature,” executive director Shannon Donovan wrote in an email.
“We understand that due to the nature of our sport, football may be considered inherently risky. As a result, we continue to do our due diligence to ensure that we have sufficient affordable insurance coverage for our members.”
Donovan said there may be instances in the process of a lawsuit or insurance claim where some liabilities are dealt with separately, but those are always managed through their insurance provider.
Football Canada says it is finalizing its agreement with OSIC on all matters relating to maltreatment, which can refer to anything from allegations of abuse to complaints about bad coaching.
Gymnastics Canada says it has never settled an abuse or maltreatment case out of court, has “never had or contemplated creating a ‘self insurance fund,’ ” and does not specifically budget for “non-insurable liabilities,” CEO Ian Moss said in a series of emails.
He said that to his knowledge, “there has never been a payout regarding allegations of a sexual nature.”
“Any lawsuit against Gymnastics Canada is dealt with through an appropriate legal process and the Gymnastics Canada Board of Directors are informed of any changes to potential liability as the legal process progresses.”
The organization regularly reviews its risk level, and Moss said that “due to the nature of our sport and the age of the participants, gymnastics is considered ‘high risk.’ “
The national organization and its members do have insurance coverage, but because many policies have exclusions, “Gymnastics Canada makes sure that it has appropriate coverage to manage any eventuality or circumstance,” he said.
The organization has just finalized an agreement with the OSIC.
Rowing Canada Aviron “has never had a civil lawsuit filed against it in relation to any safe sport matter; therefore, it has never settled a case out-of-court,” CEO Terry Dillon wrote in an email to CBC News.
He noted that it also “does not have a fund to self-insure against any form of claim that may be made against it, nor does it have a fund to self-insure against claims made against any individual that falls under its care.”
Complaints must be filed with the independent third party appointed by Rowing Canada.
Steps to resolving a dispute include: alternative dispute resolution, resolution before a complaints resolution officer, or a hearing before an independent discipline panel.
Rugby Canada says it budgets annually for insurance premiums and claims, which are primarily focused on injury, but also include maltreatment.
“Our insurance policies cover us against harassment and abuse claims, as those are insurable liabilities,” Tania Richards, director of marketing and communications, wrote in an email to CBC News.
Powers, a former board member and vice-chair of Rugby Canada, said there was a time when the NSO had several very large claims and its insurance company refused to cover the risks.
“I do not believe that we ever had a separate self-insured fund like Hockey Canada — as far as I know Rugby Canada was always able to find insurance to cover off the risks associated with the sport — but as I said, the premiums were very high for a while,” she said.
CEO Ahmed El-Awadi says Swimming Canada does not have a fund it can use to self-insure against some liabilities, nor does it have any plans to create one.
“Those types of funds don’t exist,” he said in an interview with CBC News, noting that if Swimming Canada was required to pay the deductible by the insurance company during the execution of a policy, they would do so, but nothing outside that.”
Registration fees paid by swimmers across Canada are used to “invest in our future, our next generation athletes. We use the funds to invest in our sport programs.”
Swimming Canada has signed on to the OSIC complaint and investigation process, but currently has what it calls a safesport officer to triage every complaint or claim.
It follows a legal dispute resolution process that may allow the two sides to come to a “common ground,” which sometimes includes a settlement covered by insurance.
“We don’t try to suppress or hide or do anything like that,” El-Awadi said.
“One of the key items is making sure that we report everything and then the insurance at the end of the day will decide whether they want to pay or they don’t want to pay.”
El-Awadi says some of the complaints Swimming Canada has received are historical, going back 15-25 years. Those involved finally feel safe to report alleged abuse, he says, which is a good thing.
“The sports system may be a bit late, but there’s never a bad time to heal.”
“We can confirm that Tennis Canada does not currently have and has never had a reserve fund for non-injury/health liability claims,” Valérie Tétreault, director of communications, said in a series of emails.
“We stand behind our code of conduct policy to ensure that our sport is as safe as possible for all stakeholders. Our independent third-party mechanism is facilitated by Whistleblower Security, and as would be expected, matters relating to third party investigations are confidential to ensure the process is truly at arm’s length to Tennis Canada.”
Tétreault said Tennis Canada has its own Safe Sport policy, as well as a detailed code of conduct, and is committed to “the fair, transparent and equitable treatment” of everyone under its purview, managing allegations and complaints “compassionately, fairly and impartially.”
Wrestling Canada has settled litigation out-of-court “when it is appropriate to do so,” said marketing and communications manager Darren Matte. However, it does not have a specific contingency fund to cover non-insurable liabilities and is not considering creating one, he said.
“While our annual budget generally includes a small contingency to address any and all operational overages, that contingency has not been used to pay out any financial settlements from litigation which was either threatened or commenced,” Matte said in an emailed statement.
Wrestling Canada does have “abuse liability” coverage in its general insurance policy package.
Any complaints are currently vetted by an independent third party and if there are any alleged offences under the Criminal Code, they are referred to police. Wrestling Canada is working on becoming program signatories of OSIC.