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Insurance fraud a growing issue in Canada

May 7, 2021 – Haley Dawn Stoddard, 50, filed for her second bankruptcy on September 22, 2017. She had previously filed for bankruptcy in 2006. According to court documents, of her total $58,499 in declared total debt, $32,000 was Employment Insurance (EI) overpayment—this meant EI accounted for 55 per cent of her declared debt. She also owed another $3500 to the Canadian Revenue Agency, which meant that 60 per cent of her total debt was public debt. 

Stoddard appeared in court via teleconference in March, where she openly admitted that the EI overpayment was the result of false filings and that she “shouldn’t have done it”. 

However, debts incurred by fraudulent means or through false pretenses aren’t discharged in a bankruptcy. 

“I can’t make the EI authorities pursue this. What I can do is make it crystal clear that my Order does not release this debt by Ms. Stoddard,” said reg. Raffi A. Balmanoukian during the judgement on March 8. “Indeed, as a matter of law I cannot order that it is released. What EI collection officers do about that as a means of protecting the integrity of its programs and the interests of the millions of employers and employees who pay into it, and of the state which is ultimately responsible for its fair administration, is something I cannot order. It is only something I can behold with some sense of astonishment and bewilderment.”

This showcases the growing issue of EI fraud in Canada–the Insurance Bureau of Canada reports insurance fraud costs Canadian consumers upwards of $1 billion annually.

What EI collection officers do about that as a means of protecting the integrity of its programs and the interests of the millions of employers and employees who pay into it, and of the state which is ultimately responsible for its fair administration, is something I cannot order. It is only something I can behold with some sense of astonishment and bewilderment.”

Stoddard’s case also comes in the wake of the federal government announcing the monumental task of recouping hundreds of millions in COVID-19 benefit overpayments. They said the desire to rollout programs quickly was done at the expense of the mechanisms that are typically used to vet applicants’ eligibility and prevent fraud. 

In March, Auditor General Karen Hogan said the federal government missed chances to flag fraudulent claims for emergency benefits last year, potentially paying large sums of money to insolvent companies. Canada now faces a costly—and likely long-lasting—effort to recoup the $97.6-billion Canada Emergency Wage Subsidy and the $74-billion Canada Emergency Response Benefit that was doled out last year. 

“Departments ended up really reacting in record time,” said Hogan in a press conference on March 22. “They were able to design and roll out a program that for many cases, especially for the wage subsidy, had never been seen before. While maybe not always doing a sound analysis at the beginning, they did a very sound analysis as the program rolled out… and made adjustments in real time,” Hogan said during a press conference Thursday.

She said recent audits flagged many instances where officials could have made adjustments to the program that might have prevented the the wage subsidy from going to insolvent businesses and fraudsters, but said the Canadian Revenue Agency (CRA) did not have all the information required ahead of time to validate each company’s application before handing out payments. The agency also failed to ask for each employee’s social insurance number, which could have prevented “double-dipping” between the programs. 

This oversight has resulted in the government giving out about $500 million in ineligible CERB payments. Hogan said that these efforts to recoup the losses will begin this spring. 

To learn more about the report, visit: https://www.canada.ca/en/employment-social-development/news/2021/03/joint-statement-on-oag-cerb.html