Canadian disability plan administrators report instances of suspected disability insurance fraud directly to their insurance carrier, according to Sean Maxwell for Benefits Canada. In cases that involve a disability fraud ring, plan administrators also notify law enforcement. Under Canadian law, disability is a prosecutable offense under the Criminal Code of Canada.
When plan sponsors suspect fraudulent activity, they need to be careful not to publicize the information or confront the suspected fraudster directly, advises Maxwell. These actions alert a perpetrator, which endangers the investigation by allowing the perpetrator to cover up the crime and formulate a defense. If the company carries disability insurance through a carrier, the carrier should conduct the fraud investigation; it is the victim of the crime and has staff with professional expertise in disability fraud investigation.
Administrators of self-insured plans need to consult with an attorney regarding disability fraud cases because the company sponsoring the plan is the victim, explains Maxwell. Administrators of plans insured through a carrier also need to seek legal advice. They must protect the company from potential allegations the company enabled the fraud to occur, which could lead to a denial of benefits. It is also critical for disability plan administrators to retain all records and documentation related to a disability claim in a litigation file in case the matter goes to court.