Scotiabank launched the Medicus Pension Plan, a multiemployer plan for doctors, in 2023.Nathan Denette/The Canadian Press
Pension plan provider Blue Pier is suing Bank of Nova Scotia BNS-T and its subsidiaries for $700-million in damages, alleging the bank used confidential information to set up a rival plan after talks about a possible partnership broke off.
Blue Pier Administration Corp. provides pension plans as a service to a range of employers, using a for-profit, multiemployer structure that it says is novel in Canada.
Founder and chief executive officer James Pierlot, a former pension lawyer, launched Blue Pier in 2014 with plans to target doctors and other higher-earning professionals who don’t always participate in traditional pension plans.
In 2019, Blue Pier approached Scotiabank about a possible partnership to distribute its pension product to the bank’s clients, according to court filings.
Scotiabank had a valuable set of relationships with doctors stemming from its 2018 acquisition of MD Financial Management, a wealth manager that caters to physicians, through which the Canadian Medical Association agreed to promote the bank as a preferred financial services provider.
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Physicians are seen as an untapped opportunity for Canada’s pension providers as many doctors across the country have no formal plan to help them or their staff save for retirement. Competition to serve them heated up as Blue Pier and Scotiabank each looked to fill that gap, and the $123-billion Healthcare of Ontario Pension Plan (HOOPP) opened its doors to self-employed doctors in Ontario last year.
After initial talks, Blue Pier and Scotiabank signed a non-disclosure agreement in February, 2020. Blue Pier uploaded documents outlining its proposal to a secure data room, which Scotiabank downloaded, according to court filings.
Blue Pier alleges that Scotiabank then broke off discussions, and launched its own, competing multiemployer plan – the Medicus Pension Plan – in 2023.
Blue Pier alleges in its claim that the Medicus plan contains “all the essential features” of the proposal developed by Blue Pier and set out in its confidential documents shared with Scotiabank. Crucially, Blue Pier claims the documents contained a blueprint for clearing the regulatory and tax hurdles that had stood in the way of launching such a plan in Canada, including correspondence with the Canada Revenue Agency that allegedly could have helped pave the way for the Medicus plan.
“The defendants took the Blue Pier confidential information and used it as the basis for the Medicus Pension Plan, for their own benefit, and in breach of the NDA,” Blue Pier alleges in court filings.
Scotiabank said in its own court filing that Blue Pier’s claim “is wholly without merit,” and that the bank met its obligations under the NDA “at all times.”
“The premise of the claim is wrong,” Scotiabank alleges in its defence filed with the court.
Scotiabank alleges that its Medicus plan is not the same as Blue Pier’s because it does not have the same for-profit structure. Blue Pier counters that the roles each company performs in running their respective plans are not “materially different.”
The bank also said the files it accessed through the data room contained “minimal documentation,” that much of it was “misleading, incorrect” or different than what Blue Pier had described, and “was not relevant to the establishment of the Medicus Pension Plan.”
A lawyer for Blue Pier, Peter Smiley of BYLD Barristers, declined to comment. A Scotiabank spokesperson said the bank cannot comment while the matter is before the court.
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Blue Pier’s legal claim, filed with the Ontario Superior Court of Justice, seeks $700-million in damages, or alternatively for Scotiabank to forfeit its actual and anticipated profits from the Medicus Pension Plan for up to 15 years.
Earlier this year, Scotiabank made a motion to strike Blue Pier’s claim, but Justice Markus Koehnen allowed the claim to proceed.
Blue Pier announced its pension plan for doctors in November, 2020, but struggled to attract customers and has had “limited enrolment” because the company “lacked the capital to effectively market its product,” the company’s court filings say.
At that time, Scotiabank “continued to be of the view that there was no potential for a meaningful partnership with Blue Pier,” Scotiabank said in its filing. Instead, the bank “continued the development of a pension plan offering for physicians, ultimately named the Medicus Pension Plan, working closely with various pension industry stakeholders.”
The two sides also dispute whether Scotiabank ever gave formal notice that it did not want to move forward after entering the NDA.
“After obtaining access to the data room and the confidential information, the defendants stopped communicating with the plaintiff,” Blue Pier alleges in its claim.
Scotiabank says in a court document that the bank told Mr. Pierlot in a phone call that it was calling off the discussions.