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Vigilance key for businesses to prevent health-care fraud: Oswald

By Paula Kulig, Contributor

Health-care insurance fraud is a common occurrence in Canada, but there are steps that employers and insurance companies can take to lessen the financial blow, says Toronto forensic accountant and investigator Dave Oswald.

“The best way of stopping this type of fraud is to be vigilant and to run lots and lots of data analytics to pick up who’s being fraudulent and who isn’t. It’s a very easy fraud to commit,” says Oswald, director and founder of Forensic Restitution, a white-collar crime investigation boutique.

As an example, he points to the Toronto Transit Commission that has been embroiled in a health-care fraud investigation for several years.

TTC employees were accused of submitting "inflated" receipts from a health-care company for products and services they allegedly didn’t receive, the Toronto Star reports. The Star notes that as of March, more than 220 employees have quit, been fired or retired since the probe began in 2014.

The proprietor of the health-care firm has since been found guilty of fraud and given a two-year prison sentence, while 10 TTC employees were charged with fraud, the Star reports.

Last fall, the TTC announced it was suing its insurance provider, the health-care company and its proprietor, alleging that the insurer “did not have appropriate fraud management controls in place, nor were there systems in place to detect and analyze unusual trends or patterns that might indicate fraud or abuse,” the Toronto Star report says.

“Everybody thinks that health-care fraud is an isolated thing, but it’s certainly not isolated. It happens a lot more than one would like to believe,” Oswald tells

The Canadian Life and Health Insurance Association has found that anywhere from two to 10 per cent of all health-care dollars go to fraud, amounting to $20 billion a year in Canada, according to a Toronto Life report.

“The biggest problem is that the people who end up paying are you and me. One of the reasons why your health insurance premiums are so high is because of people actually stealing money out of the system,” Oswald says. “It’s a great amount of money that’s going out of your pocket every month to fund fraud.”

He says privacy laws in Canada, unlike in the United States, contribute to the insurance industry's inability to police health-care fraud. For example, when someone sees a doctor and gets a prescription, the information about the visit is not passed on to an insurance provider, which means these companies “are unable to run any data analytics to find out whether people are being fraudulent,” Oswald says.

“The problem here is that I can’t link doctors’ visits to pharmacy claims because the physician's services are billed through OHIP and the claim to the pharmacy goes through the medical insurer. So there’s no way of matching those two occurrences.”

One remedy, Oswald says, is for the government to take a look at privacy laws surrounding OHIP, as well as allow insurers to share information about individuals and such service providers as pharmacies, chiropractors and massage therapists who may be taking advantage of the system.

At the same time, he says, companies need to be proactive, and closely examine their books and records — or hire a firm that knows what to look for. “Companies that have an in-house medical insurance scheme should definitely be looking to see whether they’re getting bang for their buck.”

Oswald says investigators in the field talk about a “fraud triangle,” which encompasses opportunity, pressure and rationalization.

“Since 2007, salaries really haven’t gone up in Canada that much, but costs of everything have gone up substantially. So people are struggling. They are under pressure and if you suddenly have a sick baby or your spouse becomes ill it can bring a tremendous amount of stress,” he says.

“The opportunity is there because, in Canada, the use of data analytics to find fraud is probably not as good as it should be. And then the rationalization is, ‘Well, everybody’s doing it.' And the justification is, 'I’m going to commit a crime, but everybody’s committing it, so it’s fine.’”

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