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Unusual Beneficiary Fraud Scheme Uncovered in Canada

This fraud scheme out of Toronto, Ontario, Canada is unusual as it is alleged to involve numerous beneficiaries collaborating with a DME provider in order to defraud an insurance plan.

According to police, Healthy Fit, a store in Toronto, Ontario, Canada created faked invoices for items like orthotics, knee braces and socks, then split the cash with Toronto Transit Commission (TTC) employees upon reimbursement from their insurer. The ongoing investigation by TTC has identified as many as 600 employees visited the Healthy Fit store.  These employees are being investigated with regards to the scheme to fraudulently obtain over $5.1 million dollars for supplies and services not rendered. Services and products were covered under the TTC’s extended health benefits plan insurer Manulife Financial. While the Canadian universal healthcare system covers basic preventative and emergency medical care, there are many ancillary benefits which are not covered such as prescription medications, dental care, rehabilitation, limited behavioral health coverage and medical aides and devices. Hence, many employers offer extended healthcare coverage as a benefit of employment. The victims of this behavior are extensive. The costs of the losses are borne by the insurance company, the employer, and the employees. The end result of benefits plan fraud is higher premiums or reduced benefits, or in some cases, the complete loss of an affordable benefits program. Given that TTC is a government entity, the losses also include all Ontario taxpayers.

Healthy Fit’s owner, Adam Smith, along with employees Sachia Leon and Savath Nget are all charged with fraud over $5,000 and laundering the proceeds of crime. No employees have been charged at this time; however, TTC has fired over 12 employees, including a supervisor,  that have been identified as collaborating with the scheme. The TTC says they are cooperating with the investigation and plan on seeking restitution in those cases where fraud is proven.

The lead was derived from an employee calling the Fraud and Waste Hotline. See the limited information in the AUDITOR GENERAL’S REPORT under Employee Benefits Fraud.

View the Notice to all TTC employees posted on July 22, 2015 here.

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