London, Ont. — London Health Sciences Centre (LHSC) has filed a $22-million lawsuit alleging a decade-long fraudulent billing scheme involving two former contractors and their company. The hospital claims it was systematically overbilled for construction work that was either inflated or never completed at all — with false invoices and supporting documents allegedly used to facilitate the fraud.
In its statement, LHSC admitted that internal audits, external reviews, and other oversight measures failed to detect irregularities, acknowledging that “everyone missed the boat” before the matter came to light.
Fraud recovery lawyer Norman Groot, who frequently represents fraud victims in civil recovery proceedings, provided commentary on LHSC’s prospects of recovering the alleged losses.
“If the allegations in the lawsuit prove true, recovering money should be straightforward,” Groot told CBC. He explained that civil fraud recovery depends on demonstrating that payments were made in reliance on false representations, which courts treat as a clear basis for judgment in fraud cases.
Groot outlined that in situations like this, recovery efforts typically involve asset tracing — following the flow of misappropriated funds into assets that can then be located, frozen, and seized to satisfy a court judgment.
However, he noted that recovery is not automatic. Even with strong evidence, fraud victims face hurdles such as asset dissipation or transfers to third parties, which can complicate enforcement. Groot emphasized that the key threshold is proving the fraud in court before any recovery can occur.
In this case, LHSC alleges that the scheme persisted for years while contractors submitted false invoices and supporting records, resulting in payments totalling more than $22 million. The hospital’s lawsuit seeks to recover these funds from the contractors personally and from their company.
Groot further commented that the presence of records, audit trails, and documentation could bolster LHSC’s case.
“Once you establish that payments were made for work that didn’t occur and that the defendants knowingly submitted false records, the courts are generally well-positioned to assist in recovering those funds,” he said.
The allegations have not been tested in court, and the defendants have not filed a statement of defence.
The case highlights the risks organizations face when relying on procedural checks that may fail to detect sophisticated fraud schemes — and the importance of civil remedies when significant losses occur.
