Employee abuse of health benefit insurance plan

Supported By:

Net Patrol International Inc.  Data Investigation and Forensic Services
Bankruptcy and Insolvency Trustees

About a month ago the famous ‘largest fraud trial in Sudbury’s history’ (source) came to an end with a guilty verdict (sentencing hearing on October 25). Paul Caron and Dirk Plate helped defraud Atlas Copco Canada of nearly $24 million. Caron was a Montreal insurance broker who managed Atlas Copco’s employee benefits and Plate was general manager at the company’s Sudbury office between 2001 and 2007 when the fraud scheme was in place (read more).

Overbilling on health benefits commonly occurs in Canada. According to a report by the Canadian Health Care Anti-fraud association, fraudulent billing activity translates to between $1.2 and $6 Billion dollars on private health care plans each year. This could be a problem for employers, says to The Beneplan Employee Benefits Co-operative: “Keeping health insurance costs down without cutting employees health benefits is a very common request from business leaders and HR professionals these days” (read more).

There are different ways to abuse health benefit plans. The employee can duplicate a billing, hiding the ‘mistake’ between a bunch of small medical bills. Doctors can also over-prescribe specific drugs that are more expensive, or a therapist can tell a patient to come for more appointments than necessary (read more).

How can employers prevent employees from abusing the benefits plan? The Beneplan Employee Benefits Co-operative sums up a few tips to protect them from fraud in health benefits:

  1. Help your plan members understand the nature of the costs by explaining the two components of your plan: risk insurance and transactional costs, like dental and drugs.
  2. Illustrate the direct relation annual claims have on the future viability of the plan and motivate more far-sighted use of these items.
  3. Design the plan carefully by adding a layer of pre-authorization, administer on a pre-approved basis before any procedure is completed.
  4. Consider a tiered plan in which costs of medication are mitigated by dividing drugs into a group primarily based on costs (read more).

Fighting abuse or fraud in health benefit plans is not only beneficial for the employer, but also for the employee members of the plan. Abuse might increase plan costs and premiums, as well as pressures the plan design and risks causing coverage reductions/elimination through efforts to contain costs. Not to mention that defrauding the benefit plan is a criminal offense that can lead to losing your job and – with the Sudbury case in mind – it can even put you in prison.