January 14, 2014
Toronto – Three Toronto-area rehabilitation clinics have been convicted of auto insurance offences resulting from co-operative investigations involving the Financial Services Commission of Ontario (FSCO), the Insurance Bureau of Canada, multiple insurers and police. The prosecutions have resulted in maximum fines of $100,000 per conviction.
These convictions stem from an investigation into a staged auto accident ring, dubbed “Project Whiplash” by Toronto Police. According to the Insurance Bureau of Canada, insurers paid out an estimated $4 million in fraudulent claims as a result of this scam.
Following is a summary of some of the convictions achieved to date:
McCowan Rehabilitation Clinic was found guilty of two offences: 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 for each offence. In addition, a significant restitution order was imposed of $120,000.
Physiotherapy Clinic faced similar charges. The registered company director at the time of the offence, Nishanthan Ponnuthurai, pleaded guilty on behalf of the clinic to making false statements, and the company was fined $100,000.
North York Health and Rehabilitation (1280 Finch Avenue West, Suite 519, Toronto, Ontario) has also been convicted of similar charges and remains before the courts for sentencing. FSCO is not aware of any connection or affiliation between this clinic and North York Rehabilitation Centre Corp. (2040 Sheppard Ave. East, Suite 202).
In addition to the convictions for the clinics, the following individuals were fined:
Sipaskaran Sabaratnam, a principal of Ontario Rehabilitation Clinic, 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 sentenced to a $10,000 fine, pursuant to the Insurance Act.
Nishanthan Ponnuthurai, a principal of Physiotherapy Clinic, pleaded guilty to a charge of failing to take reasonable care to prevent the company from providing insurance claims forms to an insurer that were not in accordance with the Insurance Act and regulations. He was sentenced to a $9,000 fine.
Jeyakanthan Thivendran, a principal of North York Health and Rehabilitation, pleaded guilty to a charge of failing to take reasonable care to prevent the company from providing insurance claims forms to an insurer that were not in accordance with the Insurance Act and regulations. He was fined $5,000.
FSCO encourages anyone with information about auto insurance fraud to call its anonymous tips line (1-855-5TIP-NOW). The public can also submit anonymous tips to FSCO online through its website.
FSCO investigates allegations of misconduct, unfair practices and non-compliance with legislation or regulations in its regulated sectors. When warranted, FSCO takes enforcement action.
FSCO is an agency of the Ministry of Finance established under the Financial Services Commission of Ontario Act, 1997. It regulates insurance, pension plans, loan and trust companies, credit unions and caisses populaires, co-operative corporations and mortgage brokerages and administrators in Ontario.
As other Insurance Act and related criminal prosecutions remain before the courts, there will be no further comment on the convictions from FSCO.
- Ontario's Auto Insurance Anti-Fraud Task Force was announced in the 2011 Budget. The Task Force was established in July 2011 and submitted its final report to the government in November 2012, which contained 38 targeted recommendations on four key areas: fraud prevention, detection, investigation and enforcement and regulatory roles and responsibilities.
- Through amendments to the Insurance Act (Bill 65) in June 2013, the government established the legislative framework for FSCO to license health clinics that invoice auto insurers and regulate their business practices. The licensing and regulation of health clinics was a key Task Force recommendation.
- In January 2013, the government announced the introduction of regulatory amendments to help prevent auto insurance fraud and abuse, including:
- Requiring insurers to provide claimants with all reasons for denying a claim.
- Ensuring claimants are given a detailed, bi-monthly statement of benefits paid out on their behalf.
- Requiring claimants to confirm attendance at health clinics.
- Providing FSCO with the authority to stipulate by Guideline the maximum payable by insurers for goods as well as services.
- Banning providers from asking consumers to sign blank claims forms.