Hundreds Fired and Millions Lost in Hospital Benefits Fraud

Hundreds Fired and Millions Lost in Hospital Benefits Fraud

This article is about the massive fraud and benefits scheme at Baycrest Hospital in Toronto. This is one of the most massive frauds of its kind, where more than 150 employees were caught and fired, and multimillions lost. It was reported that each of the 150 employees passed pocketed between $25000 and $100000. The fraud and scamming was done by making fake benefits claims for things like physiotherapy and chiropractic services. The employees would submit invoices for services they never received and received a kickback in return. For the most part, this was encouraged by coworkers, and some even felt entitled to the scam money.

Brean, Joseph. 2019. “Toronto hospital fires around 150 employees after uncovering multimillion-dollar fraud” National Post, July 10. Retrieved October 9. 2019

(https://nationalpost.com/news/torontos-baycrest-hospital-fires-around-150-employees-after-uncovering-multimillion-dollar-fraud-scheme)

Introduction Paragraph

This paper is about white-collar crime and why crimes done in groups make criminals feel better about it. Groupthink has always been a topic when it comes to crime, the more people committing the crime, the more the individuals feel safe. The thought is usually “they are not going to catch us all” well, unfortunately in this case they did catch them all, and they were all fired. Because of this loss of individuality, the employees felt they weren’t going to get caught, and because everyone was doing it, they thought it wasn’t morally wrong. The second theme that will be looked at is a white-collar crime. The other reason these workers didn’t feel bad committing this crime is that it’s a white-collar crime. They think there is no victim, and it is not as hurtful as street crime. Now from the class, we know this kind of crime is more common than most people think, and there are direct victims.

These employees were taking money away from a hospital, which is very bad, regardless if some of these people feel they were entitled to these benefits and kickbacks. The interesting question to answer here is why these people felt like they deserved these cash kickbacks even if they’re illegal. A lot of the employees felt entitled and took advantage of these for years, and I think the explanation comes from the fact it’s a white-collar crime, and it is a crime being done in a group. Due to the fact, it’s a white-collar crime and the lack of individualism that makes these people feel they are victimless crimes, and since everyone is doing it, they can do it too. In this paper, I argue that this whole benefits fraud occurred to the massive scale it was because of the loss of individualism and the views on white-collar crime. This is not the first enormous scam like this in recent Canadian history, others include;

TTC Benefits Scam (Canadian Press 2018)

The Toronto Transit Commission started an investigation back in 20014; this was after a hint was given to it its Integrity Line that some health-care providers were giving out fake receipts. The company had to part ways with the company, which had over 200 employees in connection to the multimillion-dollar scam. According to TTC, almost 223 workers were either resigned, dismissed, or took early retirement to evade being fired for their involvement in the scheme. After the 2014 investigation following a tip-off, TTC discovered that Healthy Fit (a health-care service and product provider) was giving out fraudulent containing inflated amounts for services not provided. The investigation discovered that the workers were submitting the fraudulent claims to the Healthy Fit insurance provider, Manulife, take the money, and then the employees would give some portion of the collected cash to Healthy Fit.

In 2018, TTC decided it was going to sue Manulife for negligence in its role in the scheme. TTC filed a statement in the Ontario Superior Court of Justice with the allegations that Manulife Company lacked the necessary anti-fraud management controls put in place then to recognize and assess the unusual pattern that may be an indication of abuse or fraud. According to TTC, Manulife Financial had breached its roles of care, thus contributing to the losses the transit company suffered. Due to the loss and damages suffered, the company seeking reimbursement of almost five million dollars.

According to Sean Pasternak, the spokesperson of Manulife, the company is not in approval of the allegations being made. In a statement, Patrick claimed that Manulife is always acting with diligence and integrity; therefore, he is sure that the allegations made lack merit. Pasternak added by saying that Manulife has a department that primary focus on fraud management at the company is highly involved in its development and growth. He admitted that there is always complexity when it comes to dealing with benefits fraud; however, he says that Manulife has layered and constantly evolves through its work and strategies to ensure that stakeholders are able to intervene in this risk.

By 2016, TTC had seen almost a 5 million dollar reduction in terms of cost accrued from benefit claims over the 2015 period. The transit company this drop as a measure of success in its battle to curb improper benefit claims. In last year, Adam Smith, the owner of Healthy Fit, is doing a two-year sentence after pleading guilty on two frauds totaling to over five thousand dollars.

Benefits Scams are on the Rise (Sophie Nicholls Jones, 2019)

In Canada, there is a worrying rise in workplace benefits fraud; this rise is causing insurance companies to lose millions of dollars annually; this is according to CLHIA (Canadian Life and Health Insurance Association), the organization that initiated an awareness campaign on fraud nationwide.

CLHIA conducted a survey known as the Environics Research, in which it was discovered that the majority of Canadians do not see any big deal when it comes to benefits fraud. According to the research survey, 75% of the respondents believed that the punishment of benefit fraud is through reimbursement of the claim or paying increased premiums.

However, the fact is, the consequences are and not limited to losing the benefits, employment termination, jail time or fines, criminal charges, destruction of the company’s reputation, and loss of license to practice.

Back in 2018, Sun Life blacklisted over 1,500 insurance providers after verifying their participation in fraud claims. The false claim may have included dental/ health benefit claims for procedures/ services never conducted, or misrepresentation of service dates, details, and location on receipt by service providers.

For the sake of personal protection, insurance carriers spend a lot of money on fraud management elucidations. For instance, Sun Life utilizes machine-learning and data-analytics technology to point out any apprehensive behavior, intelligence assessment to pinpoint participants in complex schemes, and investigating skills that are useful in monitoring member-claim and facility activities.

According to Gary Askin, Sun Life’s vice president, the presence of the digital era has increased its potential in identifying and stopping fraud. It has become easy to suss out fraudulent claims. He added that the prevention of fraud is key, and therefore everyone needs to play a role in the crackdown. The role is not entirely based on enforcement, but awareness and education is the ultimate weapon for stopping this act, it is best that we have informed public.

Sun Life believes there is a way that plan members can safeguard themselves from being a target. The ways suggested by Sun Life include: plan members need to keep their benefit information a secret to avoid fraudulent claims under their name, members can opt to  submit their claims online using direct deposit for quicker services, being up-to-date with carriers’ emails for monitoring claim processes, close analysis of receipts to ensure accurate information is provided, members need to avoid signing of blank forms (advanced forms), checking the forms before being submitted on their behalf.  When it comes to the people providing the services, it is vital they fill accurate information on the receipts, be keen on suspicious practices, especially around the working environment safeguarding personal information, such as licensing numbers, especially at employment premises. As a sponsor or employer, it is your personal responsibility to make sure that each member comprehends the ways to responsibly use benefit plans, the consequences of not doing as required, and the impacts of fraud activities on benefits plans.

White-Collar Crime Aspect

Also known as corporate crime, white-collar crime is a nonviolent financial motivated crime that is done by government professionals and businesses. In Canada alone, there are over a third organization that claims to have fallen victim to corporate crime, based on research conducted by PricewaterhouseCoopers LLP.

The irony of this data is that in Canada, the country’s economic crime report rates have always remained lower compared to other countries. This is according to a report released in May 2018 by PCW, white-collar crime in Canada. Globally, there are over 37% of companies that faced white-collar crime, while in Canada, it is only 36%. The Canadian 36% actually arises from the 2011 32% rate but lower than the mid-2000s figure of more than 50%.

According to PWC’s leader of national forensic services, Steven Henderson, as Canada enjoys the lower global corporate crime average, economic crime threats are continuously evolving. In most cases of the crime, the perpetrator is often a member of the organization. In Canada, the most common are fraud over assets, procurement services theft, accounting theft, and cybercrime. In recent years, there has been a rapid increase in cybercrimes like stole data, computer viruses, and phishing within the organization. Most of the targeted areas include retailing, financial, and communication departments. However, these damages are often undisclosed due to their unknown nature, or quantifying difficulties, or unshared. Organizations that have reported such crimes, one in ten claimed to have lost over five million dollars.

Combating White Collar Crime in Canada

The 2018 period may not have been a good year in terms of security grounds and corporate crimes; however, it created room for the creation of enforcement strategies to deal with a number of wrongdoings, for instance, money laundry, public bidding, and capital markets enforcements. During the fall of 2017, the Canadian government conducted an extensive public consultation program to gain probable enhancements to the integrity system and a local prosecution approach to deal with white-collar crimes. The legislation was introduced in 2018 by the parliament to deal with these enhancements.

Expansion of Integrity system– the Canadian government in March 2018, announced that from January 1, 2019, the enhancements to the integrity system would become functional. Integrity System or Regime is a set of rules that govern the eligibility of organizations to contract with the federal government of Canada. For foreign and domestic companies to conduct business with the Canadian federal government, the need to meet the set ethical standards set by the Ineligibility and Suspension Policy managed PSPC (Public Services and Procurement Canada).

With the current policies, organizations become ineligible to contract the Canadian federal government if it had previous convictions of any listed offenses within a three-year period. The list includes and not limited to money laundry, corruption practices, especially foreign, insider trading, fraud documentation, among others.

According to the Canadian government, the purpose of the Integrity Regime is to introduce increased flexibility within ineligibility of companies bidding public contracts, increasing the amount of triggers that may lead to ineligibility, exploring other alternative measures that mitigate the risks available especially during working with organized crimes, and finally, expanding the scope of ethical concerns in business that are covered under the system to include primary areas like dealing with human trafficking, protection of environment and labor rights.

DPAs introduced for corporate crime in Canada– the Criminal Code of Canada was introduced on September 19, 2018, to establish a DPA (Deferred Prosecution Agreements) to deal with white-collar crimes in Canada. Any company that is alleged to have been involved in financial crimes enters an agreement with the prosecutor, an agreement known as a DPA. The DPA states that; proceedings against a firm in relation to crimes subject to the DPA, at the same time instituting specified activities, the organization needs to achieve in for it to prevent being prosecuted.  These activities may include radiation measures, fines, and improved reporting requirements. The undertakings also give authority to independent third-party to assess the compliance of a company’s technique. The moment the alleged company passes the terms provided by the DPA, the criminal charges are dropped. The key feature in the new system includes: remediation agreement can be availed for only economical charges, for instance, fraud.

Individualism in Crime

Individualism can be viewed as a self-centered culture, while a group-oriented culture is known as collectivism. There is a reason why there is so much crime in Western Nations compared to Eastern nations, why? People who belong to societies that promote individualism i.e., Western Nations, he or she is not really concerned with the consequences of his or her personal behavior, thus translating to high crime rates.

Self-control goes down when in groups- self-control is one of the most important elements in the daily lives of humans. It is the ability to shift emotions, thoughts, and impulses to abide by personal values, social norms, support pursuit of personal goals. Human development assessed from an ecological perspective suggests several systems influence people’s outcomes of development. Individualism is closely associated with crime because people from this self-centered culture are only interested in the satisfaction of their personal needs rather than the general well-being of society. In order to satisfy these needs, what means necessary will be undertaken regardless of the outcomes, whether the activities will cause harm to others or not. Therefore, there might be a close relationship when we look at white-collar crimes and individualism. People who take part in benefits fraud are only looking at satisfying their needs rather than ensuring a proper function community. The mentality that we are doing this many of us, but as an individual only increases their sense of justification for taking part in criminal activities.

Crime and social disadvantages Wikstrom (2016)

Let us suggest that social disadvantage impacts the involvement of people in crime, basically through the rule-and resource-based process of social selection that influences their exposure to crime. For instance, in the evolution of man, it was a lack of food on trees that made him start to hope from tree to tree and finally depend on walking to look for food. This fact may become relevant if we assess why people engage in white-collar crimes. The lack of certain amenities may force an employee to seek a quicker way of satisfying this particular need. Social disadvantage is a driving factor that leads people into crime just to meet certain elements required elements in life. However, it is arguably when we see socially advantaged people taking part in corporate wrongdoings, thus question if poverty, among other social disadvantages, draws people towards crime.

Conclusion

It is evident that Canada is actually facing a real threat from white-collar crimes, for instance, cybercrimes and benefits frauds. Being ranked as the lowest country to experience such crimes leaves it exposed to people with wrong intentions to take advantage. However, the country has come up with ways to intervene in this problem through the help of the DPA and Integrity System. Other than that, it is equally important that members of the public be educated on the ways they can prevent such corporate crimes.