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Toronto hospital fires around 150 employees after uncovering multimillion-dollar fraud

July 12, 2019 – In what could be one of the largest and longest-lasting benefits fraud schemes ever discovered in Canada, a Toronto geriatric hospital has dismissed approximately 150 employees for falsely claiming as much as $5 million in benefits over an eight-year period.

“It appears to be organized,” said William Reichman, president and CEO of Baycrest Health Sciences. “It had to be done in such a way that it would escape at least detection by the benefits administrator… It’s a betrayal of trust.”

As in previous scams of comparable size, such as the one discovered last year at the Toronto Transit Commission, this one involved misuse of prescription coverage for orthotics, knee braces, and compression stockings, but also physiotherapy.

No criminal charges have been filed, and none of the allegations made by Baycrest and its investigators have been proven in court. Baycrest spoke with police twice: first several months ago, then again in the last two weeks to update them on the conclusions of their internal probe.

The hospital administration “undertook to investigate this on their own,” said Det. Sgt. John Whitworth. His meetings with hospital administration were advisory, he said, and Baycrest has not formally engaged the police to investigate.

“If it involved public safety, we would take that decision out of their hands,” Whitworth said. But as it stands, he has not seen anything that demands police intervention, so the “ball was left in their court.”

“I anticipate that they will be back in touch with myself next week,” Whitworth said. But “if they never call me back, we will never do anything with it.”

Baycrest’s investigation found two main types of fraud. In one, an employee would submit invoices for services they never received, such as physiotherapy, and pay a kickback to the provider. In another, an employee would accept unrelated products — purses, for example, or shoes for athletics or fashion — with the provider pocketing the difference in price between those items and the prescribed medical device.

The hospital operates its own employee benefit plan from a pool funded 75 per cent by the government of Ontario and 25 per cent from employee premiums, so fraud against this system disadvantages both the public and the employee’s own colleagues. The plan is administered by Coughlin & Associates, based in Ottawa and Winnipeg.

Baycrest said consultants discovered the fraud several months ago when the hospital hired them to investigate a possible partnership with other hospitals in a network of approved providers. By looking at Baycrest’s providers, the consultant recognized some from other cases of benefits misuse involving orthotics, orthopedic shoes, compression stockings and braces.

“That’s where we see the most misuse,” said Gordon Burke, president of Orion Audit Ltd., the company that conducted the investigation. This area of medical supply is “highly unregulated.”