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Medical insurance fraud widespread, as employees, providers rip off benefit plans

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Employers and their insurance providers are reeling at the proliferation of fraud rings — groups of employees that work together to abuse and exploit benefit plans, with medical services providers as their eager accomplices.

“You’re sitting in the lunchroom when a co-worker comes in and says, ‘I’ve got $1,000 worth of massage receipts, $2,000 worth of physiotherapy receipts, submit them all, and we can share the money,'” explains Gary Askin, a former commander with the Waterloo, Ont., police force who now works as a fraud investigator with Sun Life.

Cash, cash cards, purses, designer sunglasses, coats, and iPads are examples of what people have been able to get with fraudulent health benefit claims.

“They’ll say there’s no need to worry about getting caught, because they know the provider, and if the insurance company calls them, they will validate the claim.”

Askin refers to fraud ring organizers as “recruiters” and says the schemes can grow quickly, as employees reap rewards and spread the word.

Former police commander Gary Askin now works with insurance giant Sun Life, investigating cases of benefits fraud. (John Lesavage/CBC News)

“They rationalize it by saying ‘you didn’t get a raise last year,’ or ‘don’t worry, it’s just the insurance company’s money.’ They make some very compelling and convincing arguments.”

Sun Life estimates that 85 per cent of its fraud losses involve collusion with a medical services provider.

Clinics that offer massage, physiotherapy, orthotics and compression stockings are most commonly used. Sun Life “delisted” a whopping 1,500 providers across Canada last year alone, after proving they had been involved in false claims. Claims from those clinics are no longer accepted.

“You’re stealing from your employer,” says Dave Jones, Sun Life’s head of group benefits. “You are stealing from the wallet of money, if you can think of it that way, that’s used to pay for your health care, and the health care of your family, and the health care of your friends and colleagues at work.”

The industry association has recently launched a public awareness campaign called “Fraud=Fraud,” to educate Canadians about the problem. The website features a link to a page of email addresses and phone numbers, where suspected cases can be reported to authorities.

An image from the CLHIA’s public education campaign. Many employees don’t realize that criminal charges as well as termination of employment can be among the consequences of benefits fraud. (CLHIA)

One case that made headlines in 2018: the Toronto Transit Commission fired 250 employees after discovering they were all involved in a scam related to orthotics. The service provider — who facilitated the entire escapade — has been sentenced to two years in a federal penitentiary plus three years on probation.

Meanwhile, a Toronto firefighter was sentenced to six months in jail for submitting $32,000 in forged receipts. A professor at York University appealed her firing after falsifying invoices for $8,000 worth of massage and physiotherapy, but lost.

How it’s done

A typical scam might involve compression stockings. The fraudulent provider is aware that a particular company’s benefit plan will cover four pairs in a year, at a cost of $220 each.

When an employee arrives with their prescription, the provider presents a new and enticing offer: pay for all four, submit the receipt and be reimbursed in full by the benefit plan — but receive just one pair of compression stockings and collect some “incentives” on the side.

Insurer Green Shield Canada sent an undercover investigator into one such meeting in an Ontario city last August to pose as an employee. She recorded the meeting with a hidden camera.

“I can give you the website, you can choose what kind of shoes,” the provider tells the investigator, who selects a pair of Ugg boots.

“Show it to your husband too, OK?” he adds, well aware that the plan will also cover a spouse’s medical needs as well.

Sun Life’s Dave Jones says the company’s fraud team includes close to 100 investigators, some of them former police officers, others are data scientists. (Ed Middleton/CBC News )

Green Shield’s Brent Allen says providers often encourage scam participants to max out on their plans’ provisions. He’s seen employees collect all manner of goods.

“We wouldn’t think it’s acceptable to steal from our employer outright,” he says.

“If you saw somebody walking out with an iPad that the employer had bought, you would be offended by that. Then why is it OK to go to a provider and get an iPad that that employer paid for?”

Life and death decisions

Allen attributes the fraud epidemic to greed.

“There’s a lot of money in our industry,” he says. “People are going to want to take pieces of it.”

In total, private insurers paid out $34 billion in health claims last year, according to the Canadian Life and Health Insurance Association (CLHIA). Estimates for the number of fraudulent claims range from two to 10 per cent, meaning between $600 million and $3.4 billion is being stolen annually.

Those costs can be paid indirectly by honest, innocent employees.

“There are life-saving drugs available under these plans that can cost hundreds of thousands of dollars,” Allen points out.

And employers can’t afford to be paying hundreds of thousands of dollars for claims that aren’t real when they have somebody truly in need. It’s forcing employers to make decisions about whether they cover expensive drugs that could be the difference between somebody living or dying, working or not working.”

Data and artificial intelligence

The CLHIA’s public awareness campaign includes advertising on Facebook, LinkedIn and Twitter. A professionally produced commercial shows an employee being escorted out of the office by security with a box of their belongings, while shocked co-workers stand and stare.

“You were appreciated and liked, soon to be rewarded with a promotion and raise. But you threw it all away,” intones a sombre voice-over. “So if you’re thinking about falsifying your health or dental claim, think again.”

But as schemes become more sophisticated, so do detection methods. Green Shield uses an artificial intelligence program to spot fraudulent claims. Sun Life has a team of almost 100 investigators, using special software to make connections between suspicious clinics and employees using them.

“These are resources I would’ve died for in policing,” says investigator Gary Askin. “We’ve got more data scientists working for Sun Life than any police service in the country, with the exception possibly of the Mounties.”

The industry association hopes its awareness campaign will generate a number of tips regarding cases of suspected fraud. The message they’re trying to send is clear: if you’re not prepared to do the time, don’t do the crime.

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Real Estate

Montreal real-estate prices climbing much faster than Toronto or Vancouver: study

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MONTREAL — The cost of housing per square foot has skyrocketed in Montreal while other cities saw little change over the last year, according to a new national survey.

The study found that condominium prices in downtown Montreal are up 13.5 per cent from last year to, on average, $805 per square foot.

That’s not as high as other cities, but it’s catching up — and Montreal’s rate of growth is outpacing other major Canadian cities.

Toronto’s condo prices grew to $1083 per square foot, an increase of just under 10 per cent, according to the study. In Vancouver, where you can find some of Canada’s most expensive condo prices, rates are down 4 per cent to $1192 per square foot.

To make the comparisons, Canadian real estate giant Century 21 collected data from real estate boards across the country to calculate the home costs per square foot.

“It’s important to compare apple to apples,” said Todd Shyiak, the company’s vice president of operations.

Montreal’s rise was even more explosive for detached homes and townhouses.

Detached houses in Montreal’s downtown and southwest rose to $958 per square foot, 40 per cent up from last year.

“It’s wild,” said Century 21 broker Angela Langtry. She says the pandemic raised demand.

“People had a lot of time to figure out they don’t like the home they’re in,” she said. “They all want pools.”

There was a big spike in sales, she noted, following a pause in brokerage during the spring, at the peak of the pandemic.

Experts say the pandemic will push people into the suburbs as they search for affordable housing and home office space.

“A huge portion of our society’s housing needs changed overnight,” said Shyiak. People “no longer need to be 10 minutes from the office.”

He says that could mean less demand for condos in the future. “People want their own front door,” he said.

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Real Estate

Carttera buys prime downtown Montreal development site

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Carttera has acquired a prime downtown Montreal site at 1455 De La Montagne St. which will mark its third development on the thoroughfare.

“We think it’s probably one of the best, if not the best, locations in the whole city,” Carttera founding partner Jim Tadeson told RENX. “We’ve had great success on De La Montagne.”

The two earlier projects are: L’Avenue, a building with 393 residential units, 84,000 square feet of office space and 34,000 square feet of retail that was developed with Broccolini and occupied in 2017; and Arbora Residences, a two-phase development with 434 rental and condominium units in three buildings being built in partnership with Oxford Properties.

Thursday’s latest acquisition, for $48.5 million from 630745 Ontario, is a 31,750-square-foot surface parking lot with flexible mixed-use zoning on the corner of De La Montagne and De Maisonneuve Boulevard West.

The site is near the Vogue Hotel Montreal Downtown, the new Four Seasons Hotel Montreal and high-end retail.

“It’s zoned for up to 203,000 square feet of density, which we’re going to take advantage of,” said Tadeson. “Our vision for the site is a condominium project with some retail.”

Since there is no demolition required and no heritage issues to contend with, Toronto-based Carttera plans to move ahead quickly with the luxury project.

It’s in the concept design phase and Tadeson said it could take six months or more before it’s prepared to make a submission to the city.

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Real Estate

Montreal Has the Hottest Real Estate Market in Canada Right Now

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If you thought Toronto’s real estate market was on fire, it’s time for a second take, because the market in Montreal is the hottest in all of Canada right now.

A newly-released annual report from CENTURY 21 Canada reveals that, following an early-spring decline due to the COVID-19 pandemic, sales numbers are bouncing back and house prices across the country are maintaining their strength. The study compared the price per square foot of properties sold between January 1 and June 30 of this year, compared to the same period last year.

In Toronto and Vancouver, unsurprisingly, prices remain high. But while regions across the country are seeing varied stories when it comes to their housing market fluctuations, Montreal stands out — there, prices have increased dramatically since 2019. While the numbers remain lower than Toronto and Vancouver, that housing market is proving to be the country’s strongest right now.

In Quebec’s largest city, prices have increased significantly since last year, particularly in the downtown detached house and townhouse markets. For example, the price of a detached house in Montreal’s downtown and southwest rose 42.14% to $958 per square foot, while townhouses went up 44% to $768, and condos, 13.55% to $805. Comparatively, in Toronto and Vancouver, prices saw more modest increases or, in some cases, even declines.

“Even though real estate in Quebec was not considered an essential service, we have seen strong demand and a jump in prices in 2020,” said Mohamad Al-Hajj, owner of CENTURY 21 Immo-Plus in Montreal.

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