HOW TO EFFECTIVELY

CHALLENGE A SUSPECTED

FRAUDULENT DISABLITY CLAIM

Ryan Conlin and Allison Taylor

Stringer LLP

Management Lawyers

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The Meaning of “Fraud”

Deceitful conduct designed to induce another to give something of value by:

1) lying;

2) making a statement that ought to have been known to be false;

3) concealing a fact which may have affected other party’s decision.

Murrell v. Simon Fraser University (1996)“In deciding whether or the context justifies dismissal, there are two principles to be discussed. First, the cases make a distinction between “an error in judgment” and “deliberate attempt to deceive”. A single dishonest act which is merely an error in judgment and not made with an intention to deceive is not grounds for dismissal.

Second, the consequences of the dishonest act must be such that it destroys the employer’s confidence in the employee because of the character flaw such conduct reveals, hence, before a dishonest act justifies dismissal,….the employer must subjectively have believed that the employee had disabling character flaws and further that a reasonable, informed person would also have concluded that the employee had flaws that permitted dismissal without cause”

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Unsuccessful Fraud Defences

Surveillance showing employee lifting a case of beer on one occasion will not be sufficient

Not similar to repeatedly lifting heavy objects in workplace all day long

Other evidence will be needed to suggest that necessary intent to deceive present

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In Re Metropolitan General Hospital and CUPE Local 1124 (1990), registered nursing assistant terminated for claiming sick leave benefits on days when in fact working at a nursing home

Employee mistakenly believed that sick leave was “earned benefit” that she could claim whether or not she was sick

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Immediate admission when confronted a key factor

Voluntary disclosure about claiming sick benefits on other days also in her favour

Reinstated

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Similarly, in Re Bell Canada and CEP (1996), employee went off work due to stress of sudden illness of both parents

On certain days, claimed sick benefits from Bell while performing a job for Canada Post

As a letter carrier, required to walk route and deliver mail and not to interact with public, unlike Bell job

Despite denial, no intent to defraud employer so reinstatement, but without back pay

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In Re Perley and Rideau Veterans' Health Centre and CUPE Local 870 (grievance of Antoinette Onwuachi), employee alleged to have exaggerated symptoms to physician and management

Employee at school while off work

Evidence suggested that fluctuation in pain and mood was real

Medical evidence supported that she was managing to go to school with difficulty, but could not work

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In Re Perley and Rideau Veterans' Health Centre and CUPE Local 870 (grievance of Antoinette Onwuachi), employee alleged to have exaggerated symptoms to physician and management

Employee at school while off work

Evidence suggested that fluctuation in pain and mood was real

Medical evidence supported that she was managing to go to school with difficulty, but could not work

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Initiatives to contact employer while on sick leave inconsistent with intent to defraud

Number of documented regular visits to doctor with adjustments to medication mitigated against manipulating doctor

Arbitrator felt it unlikely that she would have looked for student placement at Health Centre had she been seeking to defraud it

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Arbitrator accepted that grievor should have told doctor about school activities

Lack of transparency warranted discipline

Employee was reinstated but received unpaid one month suspension

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These cases demonstrate type of evidence which will preclude finding of fraud

Employee must be “caught” contradicting position employee is taking with respect to inability to work or perform modified work -shows intent

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Examples of Successful Fraud

Defences Re Ontario Public Service Employees Unions and Toronto Community Housing Corp. (2012)

Employee had hurt left hip at work climbing stairs

Employee offered administrative work previously performed while recovering from knee surgery

Employee refused to return to work because of difficulty walking between parking lot and office, pain and drowsiness from medication

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Tip led to video surveillance of employee playing golf

Once employer had surveillance video, despite understanding that hip surgery had been suggested, employee was terminated

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Arbitrator held no evidence that employee had made any effort to resolve pain, medication issues

Employee walked considerable distance while golfing, contradicting claim could not walk from parking lot to office

Employee did not provide offer of modified work to doctors

Never raised complaints regarding pain and drowsiness from medication with doctors

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Employee claimed doctor agreed to change medication and prepare new FAF

Doctor denied this

At the time modified work was offered, employee could have performed it based on doctor’s evidence

Content to be off work while decided whether or not to have hip surgery

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Arbitrator found employee not entitled to receive sick pay due to failure to cooperate, deliberately misleading doctor by failing to provide with offer of modified duties

Grievance dismissed - termination for just cause

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Re Ineos Nova Ltd. and CEP (2010)

Grievor left a message : “I think I’ve come down with …(pause), I am really sick right now so I won’t be in today. Ok. I’ll see you tomorrow. Bye.”

Unfortunately for grievor, phone line did not disconnect

Message machine recorded conversation with his neighbour in which he indicated he would put up drywall in her house on sick days

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When returned to work, met to discuss absence

Voicemail not disclosed, but employee was asked whether he had been sick – he said yes

Employee suspended and given a further opportunity to explain his absence

Within a few days no further information from union or employee so terminated for cause

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Employee obtained a medical note confirming “major depressive episode” as of a few days after termination

Arbitrator held that voicemail admissible and incriminating

Undisputed that grievor suffered from depression which affected him episodically, but no evidence to support claim that he had experienced depressive episode on the dates in question

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Doctor admitted that she could not offer retroactive diagnosis

Arbitrator adopted comment of Arbitrator Swan in Canada Post Corp. v. W (1986) “The grievor has engaged in a flagrant attempt to mislead the employer for … personal gain and simply has not demonstrated that circumstances existed to mitigate the penalty”

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Arbitrator accepted test regarding penalty from Canadian Broadcasting Corp. v. CUPE (1979):

1) bona fide confusion or mistake by grievoras to whether entitled to do what he or shedid;

2) grievor’s inability to appreciate wrongfulness of act;

3) impulsive or premeditated nature of act;

4) trivial nature of harm done;

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5) acknowledgment of misconduct by grievor;

6) sympathetic personal motive for dishonesty such as family need rather than “hardened criminality”;

7) past record of grievor;

8) grievor’s future prospects for good behaviour;

9) impact of discharge in view of age, personalcircumstances etc.

Grievance dismissed, terminated for just cause

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Re Cuddy Food Products v. UFCW (2002)

Employee reported sharp pain in lower thoracic/upper lumbar back

Initial diagnosis of lumbar strain, return to full duties in 2 to 4 weeks

Alleged pain increasing over time

Suspicions led to video surveillance, including of employee wearing overalls and work gloves cleaning garage, lifting kitchen table

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Employee said decision to clean garage an impulse while going for walk

Contradicted by the fact that he was wearing overalls and gloves, which he kept in the garage as well as statements to company that he could not walk without cane

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Contradictory evidence about medication either making him lightheaded and dizzy or “brand new” lacked credibility

Arbitrator held that employer had met evidentiary burden to establish fraud

Up to employee to explain how he had “very good day” on date in question whereby he did not need cane to walk and could spend day cleaning garage

Grievance dismissed

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Simoes v. Metaldyne Machining and Assembly Manufacturing Co. (Ontario Court of Justice), 2006

Employee off work due to viral labyrinthitisaffecting balance

Medical report from insurer stated employee to be seen “weekly”

Doctor projected RTW to be three months

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Employee’s father became ill and employee then left for Portugal where father lived

Father died shortly thereafter

Defendant obtained employee’s telephone number in Portugal and called him

Stated he would obtain further medical documentation in Portugal and asked for leave of absence

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Employee indicated that he intended to remain in Portugal to settle father’s estate

Leave of absence denied

Employee told to return to Canada immediately to resume treatment in Canada

Employee terminated when did not return

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Employee alleged off work with depression, but never mentioned at the time

Medical report could not be interpreted as justifying employee doing what he wanted for three months

Court pointed out that employee was not ordered to return to work, but to return to Canada to continue to see his own doctor, and not terminated until had been given 12 days in which to return ie. after emergency leave days related to his father’s illness and death had expired

Wrongful dismissal action dismissed

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Lawrence v. Honda (1998)

Employee had medical note excusing him from work for three weeks – chronic fatigue

Brother picked up STD form and revealed that Lawrence away hunting

Employee told if caught hunting on short-term disability would be terminated

Initial short-term claim denied

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Submitted a further short-term claim with further medical evidence

Did not disclose to doctor that he had been hunting – medical said “zero energy level”

Placed under surveillance which demonstrated was again hunting

Terminated for cause

First disability claim might have been an “error in judgment” according to Court

Second period of hunting was clearly fraudulent

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Surveillance

Two opposing strands of arbitral decisions

1) Employee privacy rights should be balanced against employer’s right to investigate (“reasonableness”)

2) If relevant, must be admitted into evidence, otherwise a violation of natural justice (“relevance”)

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First strand of cases requires the following:

1) Was it reasonable in all of the circumstances to request surveillance?

2) Was surveillance conducted in reasonable manner?

3) Other alternatives open to the company to obtain the evidence sought?

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Other strand of cases relies upon concept of natural justice

Excluding any relevant evidence violates principles of natural justice

Not superceded by need for “harmonious labour relations”

No general right to privacy that would preclude observing a person’s presence or activities in public or any expectation of privacy in public places

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Pontillo v. Zinger et al.

Plaintiff sued corporate defendants for investigating plaintiff after car accident

Court confirmed that insurance companies in such cases are entitled to conduct surveillance of plaintiffs within confines of law

Cannot trespass on private property or intercept communications electronically

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Photographing plaintiff in places open to public view is acceptable

Identifying selves to neighbours and asking for information also acceptable

Cannot threaten witnesses or litigants or defame plaintiff

Do not need grounds to believe that claim is fraudulent before conducting an investigation

Conducting an investigation is not defamatory

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In Smith et al. v. Morelly (2011), affidavit of documents served by defendant did not mention surveillance and defendant had confirmed no intent to rely on surveillance at trial

5 days before trial plaintiff’s counsel received surveillance video

Court held surveillance not admissible at trial (ambush)

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Risks of Unsubstantiated Claim

of FraudWhere insufficient evidence, terminating for

just cause can result in award of aggravated damages for hurt feelings as well as notice

However, employer can be wrong about existence of just cause if acting in good faith

If employer is reckless in alleging just cause, good faith not present

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Without fraud, termination of disabled employee can lead to Human Rights claim

May be difficult to demonstrate that good faith reason for termination exists

Option: suggest termination with a package as a resolution, rather than terminating unilaterally

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Steps to Take in Respect of

Potential Fraudulent Claim1) Ensure that all communications are in writing

and that all steps required to be taken with respect to submission of disability claim and medical evidence are clear

2) Ensure that all employees understand that medical leave is not unconditional (requires workplace policies, training from the outset and consistent treatment)

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3) Where fraud suspected, try to “paint employee into a corner” ie. compel employee to make blatantly false statement to explain conduct

4) Ensure that surveillance addresses specificstatements made by employee eg. about ability to walk without a cane, bend and twist, lift, attend work at certain hours etc.

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5) Ensure that employee is given sufficient opportunity to obtain requested medical and other documents and to attend at meetings or try modified work

6) Where modified work is provided, ensure sufficient supervision so that evidence of specific abilities is available from supervisor

7) Ensure that there are multiple witnesses to events on employer’s side

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8) Consider use of independent medical examination, multiple letters to doctor to clarify restrictions and limitations

9) Rely on surveillance only when specifically relevant to alleged restrictions and limitations eg. do not rely on “beer case” evidence alone

10)Where a possible explanation may exist, ensure that it is explored and employee’s position is on the record before proceeding

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8) Consider use of independent medical examination, multiple letters to doctor to clarify restrictions and limitations

9) Rely on surveillance only when specifically relevant to alleged restrictions and limitations eg. do not rely on “beer case” evidence alone

10)Where a possible explanation may exist, ensure that it is explored and employee’s position is on the record before proceeding

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The WSIB accepts audio/visual recordings as evidence, if they:

• provide new or more complete information than is already in the claim file,

• are relevant and pertain to the WSIB's duty to hear, examine, and decide issues under the Workplace Safety and Insurance Act, and

• are authenticated.

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Persons convicted of illegally obtaining WSIB benefits can be subject to a fine of up to $25,000 and/or six months in jail for each offence. Corporations convicted under the Actcan be fined up to $100,000 for each offence.

WSIB will routinely prosecute workers for fraud in serious cases

There is a hotline to report fraud to WSIB

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WSIB v. Koomson (2011, Ontario Court of Justice)

Defendant received funding from WSIB for a personal care attendant 16 hours per day due to diminished cognitive abilities. WSIB surveillance showed the worker driving, shopping and purchasing a television. Defendant convicted of failing to inform WSIB of a change in his condition. He was fined $20,000 and placed on probation

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