Toronto, ON (Jan. 15, 2014) – Three Toronto-area rehabilitation clinics have been convicted of multiple offences resulting from co-operative investigations involving Insurance Bureau of Canada (IBC) Investigative Services, multiple insurers, police, and the Financial Services Commission of Ontario (FSCO). The prosecutions have resulted in maximum fines of $100,000 per conviction.
Rick Dubin, Vice-President of Investigative Services with IBC said he was “very encouraged” that the courts acknowledged the seriousness of the offences and imposed stiff penalties.(1)
IBC has long advocated for increased penalties as a way to reduce organized fraud. “Insurance crime is big business that siphons dollars away from our health care system, emergency services, courts and insurers and costs consumers and results in higher rates. Higher penalties are the right way to stop these criminals,” Dubin added.
Insurers were first alerted by IBC to allegations of medical service provider identity thefts in April 2010. Responses by many insurance companies identified widespread concerns involving multiple facilities. Ongoing communication between IBC and Toronto Police Service regarding suspected staged collisions eventually led to facility investigations being combined with staged loss investigations and resulted in Toronto Police launching “Project Whiplash”. Co-operative investigations were extended to include FSCO, resulting in the reported convictions. Other Insurance Act and related criminal prosecutions remain before the courts.
Insurers paid out an estimated $4 million in fraudulent claims as a result of the widespread scam.
“IBC congratulates FSCO for its commitment to this case,” says Dubin. “We are also proud of the role IBC and its member insurance companies played. We achieved such a successful outcome because all parties – police, IBC, individual insurance companies and FSCO – worked well together.”
Here is a summary of some of the convictions achieved to date:
McCowan Rehabilitation Clinic of Toronto was found guilty on counts of knowingly making a false or misleading statement to an auto insurer to obtain payment for goods and services provided to an insured and engaging in unfair or deceptive acts or practices. The clinic was sentenced to the maximum fine at the time of the offence of $100,000 on each count. The Crown also asked for full restitution for the victim insurers. While the request was not entirely granted, a significant restitution order in excess was imposed of $120,000.
In handing down the McCowan decision, Justice of the Peace Habte Worku noted the importance of the penalty being significant enough to be a general deterrent to such schemes that not only victimize the public through increased insurance premiums but also contribute to the annual $1.6 billion costs of insurance fraud.
The court also commented on how innocent practitioners are brazenly taken advantage of by identity theft solely for the profit of the organizers.
Physiotherapy Clinic of Scarborough faced similar charges. The registered company director at the time of the offence was Nishanthan Ponnuthurai. On behalf of the clinic, he pleaded guilty to making false statements and the company was fined $100,000.
In the Physiotherapy Clinic decision, Justice of the Peace Patrick Marum also commented on the need for penalties to act as a general deterrent to these offences which contribute to the high cost of automobile insurance in Ontario. He indicated the need for and endorsed changes to the law made since this offence came before the courts which will increase available maximum penalties to $250,000.
North York Health and Rehabilitation of Toronto, has also been convicted of similar charges and remains before the courts for sentencing.
In addition to the convictions for the clinics, the following individuals were also fined:
Sipaskaran Sabaratnam, a principal of Ontario Rehabilitation Clinic of Markham, entered a plea of guilty to a charge of failing to take reasonable care to prevent the company from making false statements to an insurer. He was assessed a $10,000 fine in accordance with the Insurance Act.
Nishanthan Ponnuthurai, a principal of Physiotherapy Clinic, was charged with failing to take reasonable care to prevent the company from making false statements to an insurer and failing to take reasonable care to prevent the company from engaging in unfair or deceptive acts or practices. He was assessed a $9,000 fine in accordance with the Insurance Act as a result of a guilty plea.
Jeyakanthan Theivendran, a principal of 2216686 Ontario Inc., operating as North York Health and Rehabilitation and as Ontario Rehabilitation Clinic, was charged with failing to take reasonable care to prevent the company from making false statements to an insurer and failing to take reasonable care to prevent the company from engaging in unfair or deceptive acts or practices. He was fined $5,000 in accordance with the Insurance Act as a result of a guilty plea.
“We rely on help from the community to catch fraudsters,” says Dubin. “IBC encourages people with any information about insurance crime to call our anonymous TIPS Line (1-877-IBC-TIPS) or Crime Stoppers (1-800-222-TIPS).”
1. Because this matter is still before the courts, there will be no further comment from IBC.
About Insurance Bureau of Canada
Insurance Bureau of Canada is the national industry association representing Canada’s private home, car and business insurers. Its member companies represent 90% of the property and casualty (P&C) insurance market in Canada. The P&C insurance industry employs over 118,600 Canadians, pays more than $7 billion in taxes to the federal, provincial and municipal governments, and has a total premium base of $46 billion.
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SOURCE: Insurance Bureau of Canada