Manulife case highlights need for Fraud Prevention Month

It is Fraud Prevention Month in Canada and the issue is especially relevant in the life and health insurance space right now. Earlier this month, the TTC announced that more than 200 of its employees linked to a multi-million benefits fraud scheme had left the agency over the past four years. The workers had either been dismissed, resigned or taken early retirement after an investigation by the TTC uncovered their involvement. The internal probe began in 2014 following a tip-off to the TTC’s integrity line alleging that a health-care provider named Healthy Fit was issuing fraudulent receipts.

Last year, the owner of that business, Adam Smith, pleaded guilty to two counts of fraud over $5,000 and was sentenced to two years in prison.

Around that time, the TTC announced it was suing Manulife for negligence for not having the appropriate fraud management controls in place. The insurer refutes these claims entirely, stating that: “Manulife has robust fraud management practices, which it continues to strengthen and invest in. Benefits fraud is complex, layered and constantly evolving, and we continuously evolve our strategies and work with key stakeholders to meet this risk.''

That sentiment is shared by the CLHIA, which is a significant supporter of Fraud Prevention Month. The initiative is now in its 14th year and is spearheaded by the Competition Bureau. Insurers, as Manulife found out with the TTC case, are an obvious target for this particular crime, especially when you consider the numbers involved.

“Fraud by its sheer nature is designed to go undetected,” says Shannon DeLenardo, director, Anti-Fraud and Electronic Claims at the CLHIA. “The insurance industry covers over 28 million Canadians and in 2016 they paid approximately $32.5 billion in claims. So it’s hard to pinpoint the exact amount that goes to fraud, but we generally say it is billions of dollars annually. When a provider and patient are in collusion, that’s very difficult to investigate, as we have seen in the press lately.”

In the past, the type of fraud insurers would encounter may have involved falsifying a claim form, but it is a lot more complex nowadays. Technology has allowed fraudsters a whole new box of tricks. Common scams include health care providers using fraudulent certifications or billing without even providing a service.

In response, insurers have banded together, working in collaboration with other industries, as well as law enforcement agencies. The fight against fraud is a considerable expense for the industry, but as DeLenardo explains, the best remedy is to prevent it in the first place. 

“We encourage everyone to be smart shoppers, in terms of which providers they are using,” she says. “They key is to recognize fraud, reject it, and then report it. The CLHIA has a tip line and that can go to either a specific insurer or all of them. It is through things like Fraud Prevention Month that we can get the word out to people on how they can report these things.”