DEFENDING FALSE INSURANCE BENEFITS CLAIMS
The consequences of being found guilty of committing insurance and/or benefit fraud can range significantly depending on the nature of the fraud. Individuals or business owners who commit insurance fraud may underestimate the potentially serious repercussions of their actions. Such individuals may have consequences across various areas of their lives. It is very common for those who have committed insurance fraud to have employment, criminal, civil and regulatory repercussions for their actions.
Often, when an insurance company conducts and investigation into a plan member or business and determines that fraud has occurred, they will reach out to the offender and make a demand for the full repayment of the funds that have been collected fraudulently. It is possible to negotiate with insurance companies at this stage; however, it is important to note that even a successful negotiation and full repayment of the funds is no guarantee that the insurance company will not involve law enforcement or inform regulatory bodies.
While it may be tempting to attempt to pay back the money, doing so may sometimes have very little effect on the ultimate outcome of the case. It is important to make the correct decisions from the outset to ensure consequences are minimized, and as such it is important to contact legal counsel who has experience dealing with these complex cases. Our Firm has defended both plan members and businesses to assist in minimizing the negative impacts of insurance fraud as much as possible.
For plan members who have committed insurance fraud and have obtained their insurance through their workplace, employment consequences often result. An employee who has defrauded their workplace group benefit plan may be terminated once their employer finds out. Being terminated for committing employee benefit fraud can also result in issues with future employment. Generally, an individual who has been terminated for this reason will be unable to obtain favourable references from their past employer. This can have serious implications on an individual’s ability to gain employment in the future. Those who are not terminated from their jobs risk losing their benefits and being banned from obtaining such benefits in the future.
For businesses such as medical or dental clinics who have committed insurance fraud, very serious regulatory consequences may result, depending on the type of business involved. All medical professionals in Ontario are regulated by various institutions including the College of Physicians and Surgeons of Ontario, the Royal College of Dental Surgeons of Ontario and the College of Opticians of Ontario, to name a few. It is not uncommon for professional regulatory bodies to become involved in these types of cases.
The results stemming from a professional regulatory bodies’ involvement can be significant. Professional regulatory bodies generally have the authority to do anything from reprimanding the College member, to suspending or revoking a College members membership, which would result in the members inability to work in their trained profession.
Another common consequence of a finding that insurance fraud has been committed by a business owner is for the business or clinic to be de-listed by the insurance company. When a clinic is de-listed by an insurance company that means the insurance company will no longer cover the costs of the services offered by the clinic. This results in the patient having to cover the full cost of the medical procedure or service. De-listing is a fairly common occurrence, for example, over the course of 2018 Sunlife Financial de-listed over 1,500 medical service providers across Canada. De-listing can have serious implications on a businesses ability to remain profitable.
In addition to the possible regulatory consequences, the civil consequences of being found to have committed insurance fraud can also be significant. If a plan member or business is sued by an insurance company the financial consequences can be substantial. Defending such a claim can be time consuming, stressful and expensive. Further, insurance companies often have vast resources and highly experienced teams of lawyers to litigate these types of cases. This makes retaining the correct lawyer imperative. The loss of such a lawsuit could potentially lead to a financial loss in excess of the money originally received by the defendant due to the addition of lawyer’s fee’s and court costs.
Finally, and often the most serious consequence of being found to have committed insurance or benefit fraud, are the criminal consequences that may result. Insurance companies regularly refer internal fraud investigations to the police once it has been discovered that insurance or benefit fraud has occurred. Insurance companies have the right to refer the matter to law enforcement regardless of whether or not the funds have been paid back. Additionally, it is important to note that once an insurance company has referred a matter to law enforcement, they cannot later take the report back and stop the criminal prosecution, regardless of any settlement that is subsequently reached.
As with any criminal offence, the consequences of being found guilty of fraud can be severe. According to the Criminal Code, those found guilty of fraud exceeding $5,000 may be sentenced to a maximum of fourteen years’ imprisonment. Where an individual has been found guilty of fraud not exceeding $5,000 and the Crown has proceeded by indictment, they may be sentenced to a maximum of two years’ imprisonment. Where an individual is found guilty of fraud not exceeding $5,000 and the Crown has proceeded by summary conviction, the maximum sentence is six months’ imprisonment and/or a $5,000 fine. Where an individual has been found guilty of one or more indictable offences and the value of the subject matter of the fraud exceeds one million dollars, the minimum penalty is two years imprisonment. The Court may also order that restitution be paid to the effected insurance company for the amount that was fraudulently collected.
In addition to the criminal consequences that stem from a criminal conviction, those with a criminal record are also likely to be negatively impacted in other areas of their lives. Those found guilty of committing insurance or benefit fraud can experience immigration consequences, employment consequences and issues traveling internationally, especially to the United States.
Based on the above it is clear that a finding is guilt in relation to an accusation of insurance or benefit fraud can have very serious implications on many areas of an individual’s life. If you are being investigated for possible insurance or benefit fraud, it is important to contact qualified and experienced legal counsel immediately. Our Firm can assist in guiding you through the process to help mitigate the possible damages. It is important to make the correct decisions from the outset of such an investigation to ensure the possible negative consequences are contained as much as possible.