Fighting Insurance Fraud

If you ever watched the show the “The A-Team” in the 1980s, you might remember the oft-repeated line: “I love it when a plan comes together!” The team’s leader, Hannibal, used to say it near the end of every episode after the team of scrappy crime fighters managed, against the odds, to capture the bad guys.

I also love it when a plan comes together. And that’s exactly what happened this fall when the corrupt owner of an Ontario medical services facility was found guilty of 64 charges under the Insurance Act. He was fined $72,000 and put on probation for two years, restricting him from engaging in any activity related to auto insurers. Through the submission of false insurance documents, he had managed to bilk insurers for tens of thousands of dollars over a four month period. For the six Ontario auto insurers who were identified as victims of the scheme, more than $43,000 dollars had been paid in unmerited billings. However, more than $93,000 in potential additional expenses was saved as a result of this investigation.

The charges stemmed from a case of identity theft. Osman Nur Abukar, owner of Ideal Therapy in Toronto, had been billing auto insurers for treatment plans and assessments allegedly performed by a psychologist. One little problem, though – the psychologist in question had never heard of Ideal Therapy.

Unfortunately, it’s not an uncommon scam in the Greater Toronto Area (GTA) – a region that is rife with organized injury ring activity. Insurance Bureau of Canada (IBC) is currently investigating dozens of cases in the GTA, including other instances of identity fraud, fake billing and full-fledged staged collision rings.

What makes the Ideal Therapy case special is that is has come to such a satisfying conclusion. Convictions against insurance fraudsters are rare. Sentences that actually stop a perpetrator from continuing to do “business” are almost unheard of. They rarely include probation.

A lot of things went exactly according to plan to bring about this resolution. It is a shining example of what we can achieve when we have a good system in place for detecting and investigating these sorts of crimes – crimes that affect multiple insurers. And it is a shining example of what we can achieve through partnerships in the fight against insurance crime.

Kudos go to many individuals, including numerous investigators and claims adjusters at IBC member companies, a committed investigator and prosecutor at the Financial Services Commission of Ontario (FSCO), and a judge who recognized the seriousness of this crime. And I would like to give special recognition to the IBC investigator who pieced the whole thing together. The quality of the evidence that was compiled was so high, and the manner in which it was packaged was so effective, that the judge for the case, Justice of the Peace Robert Lewin, made the comment in court that this was one of the best prepared cases he had seen in years.

So how did it all come about? As usual, the investigation began with a perceptive claims adjuster at an IBC member company. Something about the claim didn’t smell right so the case was turned over to the company’s special investigations unit. Once there, an investigator, reviewing one of the forms from Ideal Therapy, looked up the psychologist and contacted him. Thus it was revealed that the doctor had seemingly had his identity stolen at least once.

The insurer then contacted IBC. The next step was pivotal. IBC issued a Claims Alert to all member companies asking if any other insurer had received treatment plans or assessments from the psychologist. The response was substantial. As it turned out, there were five other insurers looking at more than $100,000 in bills from Ideal Therapy, allegedly for the services of the same psychologist.

The overwhelming response is encouraging proof that our members treat IBC Claims Alerts seriously and take appropriate follow-up action. In order to unearth the high volume of fraudulent documents that proved so crucial to this case, there would have been a lot of leg work and searching through files by employees in claims departments across the industry. Everyone involved should be commended.

A big pile of presumably fraudulent documents does not make a case. The IBC investigator needed to collect the evidence, organize it, and work closely with the psychologist to confirm that the documents were fraudulent. Once the evidence was properly assembled, it was all turned over to the regulator and the case was assigned to a FSCO investigator. Subsequently, the Superintendent of Insurance issued a Cease and Desist Order against Ideal Therapy and Osman Abukar.

The FSCO investigator is a former police officer with 33 years experience with Toronto Police Service. Here’s what he said to me in a letter following the successful resolution of the case: “The quality of [the] investigative brief rivals any other that I have seen over my police career…I am most impressed with the quality of [the IBC investigator’s] work and work ethic.” He also noted that the outcome of the trial is an “excellent display of the formidable result of teamwork.”

I couldn’t agree more.

The trial itself ran from Oct. 20 to 23, 2008. The accused, Abukar, didn’t show up so the trial went on without him. The evidence was clear and overwhelming, so Lewin didn’t take long to render a verdict. During sentencing he expressed concern a fine alone wouldn’t stop Abukar from repeating his crimes, so he slapped him with the probation order as well. This was a great victory and significant acknowledgement that defrauding insurers and their policyholders is a serious crime.

At IBC, we have worked hard in recent years to build awareness with consumers and authorities about the seriousness of insurance crime. We are seeing the benefits of that as police and other investigative bodies, like FSCO, are pursuing these cases more aggressively. Courts are taking notice as well, as evidenced by the more severe punishment applied in this case.

We have also worked hard to strengthen partnerships and implement a system for better detecting and investigating organized insurance crime. Communication and cooperation between IBC and member companies is crucial. Claims Alerts are one way that we do this. Our Liaison Program is another. Under this program, IBC investigators are assigned to particular insurers, and they meet regularly to discuss any possible leads or suspicious activity. The high volume of cases currently being investigated is proof that this interaction is working.

Today’s fraudsters are sophisticated, organized and crafty. They will target multiple insurers. Perhaps they think this minimizes the risk. Their mistake is thinking insurers operate in isolation. The reality is we are now, more than ever, united in this fight. I’m proud of the role IBC plays as the centre of this unity. I’m proud of the partnerships we’ve forged with our members and with other stakeholders. I’m proud of how effective we’ve been in raising awareness. And, most of all, I’m proud of investigators at IBC who do such an excellent job of assembling the pieces and making sure that the plan comes together.

Richard Dubin is the vice president, investigative services at Insurance Bureau of Canada (IBC). He leads a staff of 45 investigators across Canada, who focus on preventing, detecting and investigating organized insurance crime on behalf of IBC’s member insurance companies.