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The Canada Revenue Agency suspects many Canadians may have received hefty tax refunds or credits for disabilities they or their family members don't have, CBC News and the Toronto Star have learned.
The Canada Revenue Agency (CRA) believes some companies may be helping Canadians abuse the system and potentially pocket millions of dollars in commissions, the joint investigation found.
A slew of companies began offering to help taxpayers secure disability tax credits and refunds after the government broadened criteria for the tax credit in 2005 and began offering a retroactive tax refund.
Last year, the government paid out refunds or assigned non-refundable credits worth about $700 million to Canadians under the disability tax credit.
The federal tax agency has launched an investigation of Winnipeg-based J & J Canadian Grants Company on the suspicion its owners colluded with a local doctor to sign hundreds of phony medical certificates — including one for a working firefighter — claiming disabilities.
Canada's largest tax company helping the disabled, the Toronto-based National Benefit Authority (NBA), appears to also be under scrutiny. Some of its clients have been receiving notices from the revenue agency demanding the return of tax refunds or asking for second opinions to certify impairments.
The CRA won't confirm whether an investigation is underway due to confidentiality issues. The company denies it is under investigation.
'Everybody has a disability'
On the NBA's website, the company promises to help Canadians with disabilities receive "the money they deserve" by helping them navigate the "bottlenecks" in the tax system to secure refunds up to $35,000. The company would receive a 30 per cent commission on refunds.
Former employees, many of whom requested anonymity, said that though they sometimes dealt with severely impaired people, they were pressured to help others with less serious issues exaggerate symptoms to increase chances of qualifying for the disability tax credit. Bob Margolese, a former employee of the National Benefit Authority, says working for the firm created 'an ethical dilemma.' Bob Margolese, a former employee of the National Benefit Authority, says working for the firm created 'an ethical dilemma.' (CBC)
"We were not supposed to reject anybody," said Bob Margolese, a former NBA employee. "Because it was quite clear: Everybody has a disability, you know? You just have to search for it."
The company offers expertise on almost 100 disabilities, including migraine headaches, gambling addiction and anxiety. Margolese said employees would push the client with leading questions.
"If they're migraines, how often?" Margolese said. "Are you sure it's not more often than that? And this must be depressing you greatly. I mean, you must be lying in bed and not being able to move."
NBA president Akiva Medjuck disputed such claims by former employees, suggesting they may be "disgruntled."
Medjuck said the company operates within the Canada Revenue Agency's guidelines and is not responsible for determining disability tax credit eligibility. The NBA president stressed the tax credits are not based on the type of disability, but rather the effect of the impairment.
"This means that there can be individuals with a 'serious-sounding' disorder that do not qualify, and individuals with what some in society may perceive as a less serious disorder who absolutely qualify."
Workers guided doctors: ex-employee
Former employees of the 150-employee company established in 2008 say workers guided physicians on how to fill out the forms and referred clients to certain physicians.
"I would put Stickies to tell the doctor where to sign, give them a little synopsis with what's wrong with this person, you know, so that they have an idea," Margolese told CBC News.
Medjuck said employees flag areas for the doctors because they often "inadvertently miss portions of the form," thereby causing delays in securing the credit.
Workers guided doctors: ex-employee
Former employees of the 150-employee company established in 2008 say workers guided physicians on how to fill out the forms and referred clients to certain physicians.
"I would put Stickies to tell the doctor where to sign, give them a little synopsis with what's wrong with this person, you know, so that they have an idea," Margolese told CBC News.
Medjuck said employees flag areas for the doctors because they often "inadvertently miss portions of the form," thereby causing delays in securing the credit.
Former employees say clients who did not have physicians — or whose own physicians had refused to sign the DTC forms — were often referred to company-recommended doctors or practitioners. For $100 to $200 fees, they would certify the clients' state of impairment.
"The doctor has no history with the patient. Zero!" complained one former employee.
The joint CBC News/Toronto Star investigation discovered that one of the company's referral doctors is not licensed to practise in Canada and another was severely restricted in his practice after disciplinary action by the province's regulatory body.
But Medjuck said less than one per cent of the company's claims were handled by the two doctors combined. While he won't reveal the current number of successful claims, the NBA website indicates the company "has helped over 25,000 Canadians with disabilities receive the government benefits they deserve."
CRA OK'd doctor: company
One NBA client, who asked not to be identified, said he received a letter last September informing him Dr. David Neger, who signed his tax credit application for heart disease was not licensed to practise.
The CRA notified him he would have to repay the nearly $10,000 disability tax refund he received, including the 30 per cent commission paid to NBA, unless he received a second opinion confirming his impairment.
Neger began seeing clients in Ontario referred to him by his brother-in-law, National Benefit Authority president Medjuck, shortly after graduating from Israel's Sackler School of Medicine in May, 2009.
Medjuck said the company is aware of Neger's status, but the doctor was "assured by CRA that he was eligible to sign [disability tax credit] claims."
Neger said he notified the CRA he was not licensed to practise. Correspondence with the tax agency suggests it was under the impression Neger was licensed in the United States. CBC News and Toronto Star research indicated no registration for Neger in any American state.
Neger said he was advised by the Canada Revenue Agency in 2010 he was not eligible to sign disability tax credit forms. "I ceased evaluating cases immediately," Neger wrote in an email.
The doctor said he has "never certified any documentation suggesting someone without a legitimate medical impairment was impaired, and was never pressured to act unethically."
Neger said he charged a fee of $200 per evaluation," according to CRA guidelines, and the fee was paid whether or not he certified the application.
Another referral doctor used by the National Benefit Authority, Dr. John Balfour Cowan, was found guilty of misconduct by the Ontario College of Physicians and Surgeons in 2003 for falsifying a medical record, making a sexual comment to a patient and substance abuse. He was limited to working as a surgical assistant in Wasaga Beach, Ont., where he lives.
Cowan told CBC News/Toronto Star he made house calls outside of the restricted area as part of his work with the NBA. After declaring bankruptcy in August 2010, Cowan said, signing the tax credit applications was his only source of income.
Cowan said he signed all DTC claims he encountered — retroactive to 10 years — because his role was to identify the "salient medical problem that would apply for the credit."
Though Cowan said he was welcomed "on board as one of the medical staff," Medjuck said the physician is not on the NBA staff.
Medjuck said the company was aware of disciplinary action against the doctor and wrote to the province's medical regulatory body last September to ask whether Cowan's licence permitted him to certify disability tax credit applications.
"The college responded in writing that Dr. Cowan was indeed permitted to do so," Medjuck said.
It is unclear whether the OCPS understood that Cowan would be conducting house calls and leaving his restricted area of practice.
However, the OCPS acknowledged this week that it made an "error" in issuing permission and later wrote Cowan and his "employer" to "inform them of the error" and said the doctor should immediately stop authorizing applications.
Former NBA employee Bob Margolese says he left his job with the firm after three months due to physical health problems — and his nagging conscience.
"I'm thinking I'm a crook," Margolese said. "It's an ethical dilemma. There's no real way you can do this and think that you're doing good.
"There were cases where I had some people who really needed the help and I was able to help them. It made me feel so good. But that was a minority of the cases."
"And now that I am disabled, it infuriates me," said Margolese, who applied for the disability tax credit last autumn due to neuropathy, a disease affecting nerves that is interfering with his hand and leg mobility. "I know that this is taking away from people that really deserve it.
"Taxes we pay are paying for people to rip off the government for all this money."
Active firefighter among clients
The CBC News/Toronto Star investigation also uncovered further details about the Canada Revenue Agency's investigation into Winnipeg-based J & J Canadian Grants Company, another company offering help securing disability tax credits, a story CBC News broke last week.
According to a sworn information to obtain a search warrant, the company's owners and a Winnipeg physician participated in an "alleged fraudulent scheme" securing disability tax credit refunds for clients who weren't disabled.
The allegations in the search warrant application are as yet unproven.
Among the several J & J clients investigated by CRA investigators was a "firefighter on active duty" who passed all physicals required to work with the fire department, the search warrant document states.
At the centre of the alleged fraud at J & J is Dr. Clarita Vianzon, 72, a general practitioner who the revenue agency says signed about 1,000 disability tax credit applications.
The doctor allegedly made "false or deceptive statements" when signing disability tax credit forms certifying that the company's clients suffered from serious medical impairments, the CRA said. Vianzon retired from active practice in November 2010.
According to the search warrant document, the disability tax credit certificates signed by Vianzon followed a formula in which she typically wrote that her patients were impaired either walking and/or dressing.
The document also detailed an interview with a J & J client who received more than $18,000 in refunds and credits dating back to 1999.
She told investigators she had visited Vianzon for certification of her forms because she "had concerns her doctor might not be willing to fill out the form." The client said she had no problems walking or dressing, but did have "some arthritis in her knees from her curling days."
The client said "Jimmy" from J & J filled in her disability tax credit application. She only signed the document.
More than 260 J & J clients who visited Vianzon have already been issued refunds by the company, valued at $2.8 million in total, according to the search warrant. Disability tax credit applications for about 700 others are frozen.
Unless they prove their disability through an independent practitioner, the clients will be required to repay the received tax credits.
The federal agency began watching J & J after noticing an uptick in disability tax credit applications signed by Vianzon.
After months of interviewing and observing company clients, Canada Revenue Agency employees raided the company office, two medical clinics and a residence last September, carrying out boxes of financial and medical records.
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