Patient bribing doctor, giving money in envelope

The 3 most common types of workplace benefits fraud

From complex collusion rings to simple filing of fudged claims, these schemes cost insurance companies hundreds of millions of dollars each year

Patient bribing doctor, giving money in envelopeCollusion rings occur when a group of employees—with a service provider (who provides receipts) as an accomplice—band together to submit false claims and split the proceeds once reimbursed. (Shutterstock photo)

Workplace benefits fraud may be low on the radar when it comes to awareness and law enforcement, but the fact is, it costs insurance companies a pretty penny and compromises employee benefits plans.

Sun Life Financial’s report: Group Benefits Fraud: Leading Edge Perspective, says this type of fraud typically occurs when three elements are present—opportunity, rationalization and pressure—which it calls the Fraud Triangle. 

People see an opportunity with the perception that there is little chance of detection, penalty or consequence. They rationalize their actions by feeling entitled to the benefits, with little regard for, or a lack of knowledge, that their employer pays directly for claims. Or they are pressured by others—be it their colleagues or service providers—to join in on the fraud, with an underlying desire or need for financial gain.

Here are the three most common examples of workplace benefits fraud


In this scenario, a plan member independently submits fraudulent health and/or dental benefits claims for services and/or procedures never performed using forged receipts. The member keeps the proceeds once reimbursed. 

This type of fraud may also occur as a duo, with the service provider and a plan member in cahoots, billing insurance carriers for services never performed and splitting the proceeds (providers give or sell receipts and members submit them). Service providers may also fudge the service provided giving the client something else, such as designer sunglasses instead of prescription eyewear, high-fashion runners instead of orthotics, or Botox instead of massage therapy. 


Collusion rings occur when a group of employees—with a service provider (who provides receipts) as an accomplice—band together to submit false claims and split the proceeds once reimbursed. Employees are often lured into this type of ring, and coerced to believe that it isn’t really fraud, as they are entitled to the benefits, with no chance of recourse.

According to Sun Life Financial Canada, more than 85 per cent of fraud losses are attributed to this type of scheme, with paper claims still being the most popular way to submit.

“Today, [benefits fraud is] not like finding needle in a haystack; it’s like trying to find a needle in a stack of similar-looking needles,” says Gary Askin, assistant vice-president, fraud and risk management at Sun Life. “Fraudsters really don’t want any kind of money trail coming back to them.” 


Fraudulent tactics service providers use include misrepresenting dates of service, locations and service details on receipts. Dentists, for example, may unbundle tooth codes to separate charges, increasing the value of the claim.   

The rise in wellness centres, or multi-disciplinary clinics, offering a wide range of services from chiropractor appointments and massage therapy to physiotherapy and acupuncture, see fraudsters taking advantage of multiple health-care benefits at the same time. They bill fraudulently, more frequently, under the various services the clinic offers. 

Identity theft is another popular tactic. Fraudsters assume a practitioner’s identity and submit false claims, or provide false services, under that name. This compromises the reputation of the “real” practitioner and could even put a plan member’s health at risk.


While not classified as fraud per se, maxing out your benefits can be considered an abuse of the system, absent of any other evidence. In this instance, plan members (a.k.a. employees) cram in services, such as massage therapy or chiropractic appointments, before the year ends to take advantage of their plan’s full offerings, even if they don’t really need them.

“Benefits are only meant to be claimed if “medically necessary,” says Shannon DeLenardo director, anti-fraud and electronic claims at CLHIA.

“That type of thing is just a great a risk to your plan’s sustainability as blatant fraud. People have to understand that your benefits are not a bank account. It’s there if you need to use it.”