Recently, the City of Toronto (”the City”) announced that it has fired nine workers in relation to alleged health benefits fraud. The exact nature of the fraud is unclear as City has yet to disclose any further details surrounding the case. The most common types of employee benefits fraud include submitting false or altered claims for payment.

The fraud came to light after the benefit plan administrator, Manulife Financial, noticed something awry when they performed a random claims audit. These audits are an important part of the risk management and business integrity process for most health insurers.  By using various analytical tools such as data mining software, insurers are able to evaluate a cross section of claims for suspicious patterns of use.

In the Toronto Star article, the City stated employee benefits claims are not processed or reviewed by local management in order to protect employees’ privacy. Nevertheless, it attributed the initial failure to detect the fraud to a loophole in the system. This highlights the importance for any organization to conduct periodic fraud risk analysis to uncover potential weaknesses across all critical systems.

Source: Toronto Star – March 3, 2009

A 23-year-old Collingwood resident has been fined $500 and sentenced to 12 months’ probation for using a forged medical prescription to illegally obtain the pain killer Tylenol 3.

The individual was arrested at a drug store after police received a phone call from the pharmacist reporting the dubious prescription. Apparently, suspicions were raised because the prescription was for nearly three times the usual dosage for this medication. Before calling police, the pharmacist had contacted the hospital where the prescription had been issued and it was confirmed that the original prescription had been fraudulently changed.

Prescription pain killers can be extremely addictive and often have a high street value.

Source: The Enterprise Bulletin