A joint CBC News/Toronto Star investigation found that many Canadians may have received hefty tax refunds or credits for disabilities they or their family members don't have. A major company linked to the scandal is run by a haredi Jew, Akiva Medjuck (please see photo at right and below). One of its doctors, Medjuck's brother-in-law is an Israeli who is not licenced to practice medicine in Canada. Medjuck has been in trouble for running a similar scam, the haredi Canadian Ptach Society. Another arm of Canada Revenue revoked his charity license, with auditors saying the society was “endeavouring to make people’s illnesses fit the criteria for the tax credit.”
Disability tax credit claims probed
By Jeannie Stiglic • CBC News
A joint CBC News/Toronto Star investigation found that many Canadians may have received hefty tax refunds or credits for disabilities they or their family members don't have.
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.
What is the Disability Tax Credit?
The credit is intended for those with severe and prolonged physical or mental impairments. To be eligible, the person must be "markedly restricted" in terms of speaking, hearing, walking, eliminating (bowel or bladder), feeding, dressing or performing mental functions of daily life.
A physician or licensed practitioner must complete and certify the medical section on the application form. In 2005, the Canada Revenue Agency broadened eligibility criteria and added a 10-year retroactive refund for those who can prove their impairment has lasted for years.
Refunds can reach $15,000 for an adult. Figures for dependent children can be much higher.
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.
"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.
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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What is the Disability Tax Credit?
The credit is intended for those with severe and prolonged physical or mental impairments. To be eligible, the person must be “markedly restricted” in terms of speaking, hearing, walking, eliminating (bowel or bladder), feeding, dressing or performing mental functions of daily life.
A physician or licensed practitioner must complete and certify the medical section on the application form. In 2005, the Canada Revenue Agency broadened eligibility criteria and added a 10-year retroactive refund for those who can prove their impairment has lasted for years.
Refunds can reach $15,000 for an adult. Figures for dependent children can be much higher.
Akiva Medjuck was a student at Yeshivas Bais Yisroel in Neve Ya'akov, Jerusalem, which is a haredi Litvish yeshiva for English-speaking students.Yeshivas Bais Yisroel is an offshoot of Yeshivas Toras Moshe, a similar type of yeshiva founded by the haredi nephew of Rabbi JB Soleveitchik. YTM's founder, Rabbi Moshe Meiselman, is known for his attacks on many Modern Orthodox halakhic and hashgafic positions.
Update 1:05 pm CST – The Toronto Star's report adds this key piece of information:
Medjuck has been in trouble for running a similar kind of business, under the banner of the charity Canadian Ptach Society. Another arm of Canada Revenue revoked his charity license, with auditors saying the society was “endeavouring to make people’s illnesses fit the criteria for the tax credit.”
The Canadian Ptach Society was a haredi charity.
A scam is a scam is a scam.
Here is the Star's report:
Company using unqualified doctors to cash in on tax relief
David Bruser and Chloé Fedio • Toronto Star
Got migraines? Or high blood pressure? Maybe you have a gambling addiction but are not sure you qualify?
Now matter the claim, the National Benefit Authority (NBA) will work to get you a federal tax refund intended to ease the financial burden of seriously disabled Canadians. The Toronto-based company takes a hefty cut if it is successful.
A joint Toronto Star/CBC investigation has found the company, which pays doctors to certify clients’ disabilities, has used one doctor who is not licensed to practice in Canada and another found “incompetent” by Ontario’s physician regulator. Though both certified clients’ as disabled, neither was qualified to.
Our probe also found several former National Benefit Authority employees who say the company helps clients file dubious claims to the Canada Revenue Agency.
NBA president Akiva Medjuck defended his business, the largest company in a growing industry capitalizing on the taxpayer-funded Disability Tax Credit program. The 31-year-old, whose Lexus vanity plate reads DTCXPRT, is proud of his record.
“There is no such thing as a dubious or illegitimate claim,” said Medjuck, whose firm aggressively markets its services and takes a 30-per-cent commission of all successful claims. “NBA helps people who believe they have disabilities navigate the complicated process of applying for (the credit).”
The disabled, and political leaders, are outraged at the damage they say National Benefit is causing to the credibility of the $700-million-a-year federal program.
“It definitely hurts people who are legitimately disabled,” said 75-year-old Hamiltonian John Morse, whose blood-clot disorder forced him to use a walker and retire early from Stelco. Morse, who filed a claim on his own, added: “They’re taking advantage of people. It’s strictly up to you and your family doctor because he knows your life history.”
For Morse, it was simple: His family doctor signed the tax forms and Morse mailed them off. Canada Revenue sent the cheque two months later. “I’m not a well-educated man at all. This process of getting the disability tax credit is so simple,” Morse said.
National Benefit’s Medjuck said he does not keep a staff of doctors. He said that in less than one per cent of cases he refers clients to doctors who sometimes use his office space to see patients, “as a matter of convenience for the client.”
“Ninety-nine per cent of the patients that contact us have no need for a referral to a medical professional and we agree that wherever possible, the patient’s family physician should be involved. . . . However, not everyone has a family doctor.”
Five former National Benefit employees ranging from “benefit specialist” to senior management describe a mill-like operation designed to process claims quickly – from initial contact with the call centre to the filing of tax and medical forms.
Four of the former employees said clients were encouraged to exaggerate their problems.
Robert Margolese handled prospective clients when they called to ask about their eligibility. He quit after a few months.
NBA trained its employees to “prep” or help clients torque their disability to meet the federal guidelines, Margolese said. “If there are migraines (I might ask): ‘How often? Are you sure it’s not more often than that?’ And, ‘This must be depressing you greatly. You must be lying in bed and not being able to move.’ I’d be kind of giving you leading questions and getting you to say, ‘Oh yeah, I do have that.’ ”
Margolese estimated that about 70 per cent of the clients he handled did not have “legitimate” disabilities. “We were not supposed to reject anybody. Because it was quite clear – everybody has a disability, you know? You just have to search for it.”
Medjuck said Margolese is not qualified to determine what a legitimate disability is. Medjuck said his company operates within the guidelines of the federal tax credit program. “We do not determine who should or should not be eligible. The Canada Revenue Agency sets the guidelines which govern the DTC, and we operate within those guidelines.”
Medjuck has been in trouble for running a similar kind of business, under the banner of the charity Canadian Ptach Society. Another arm of Canada Revenue revoked his charity license, with auditors saying the society was “endeavouring to make people’s illnesses fit the criteria for the tax credit.”
About a year before the charity Ptach Society was shuttered, Medjuck started the for-profit National Benefit Authority. Its website boasts it can get credits worth as much as $35,000.
To qualify for the federal tax credit an individual “must have a severe and prolonged impairment in physical or mental functions.” Doctors must spell out how an applicant’s claimed disability affects their day-to-day activities in at least one of several categories: Vision, speaking, hearing, walking, feeding, dressing, mental functions, and bowel or bladder functions.
The federal program also allows claims to be filed up to ten years retroactively. The more years, the higher the refund, the higher a firm’s commission.
NBA president Medjuck, who defended his business in interviews and written responses, said doctors might not know how to fill out the forms properly and that his company can help get clients the money they deserve by guiding doctors through the process.
In 2008, the taxman approved about $700 million in disability tax credit claims. At least 275,000 claims (federal officials won’t release the dollar value) were approved that year in Ontario.
Canada Revenue officials will not reveal the scope of its inquiry into the industry. The agency has reviewed claims filed by National Benefit. Court records show the taxman recently raided the offices of a Winnipeg tax credit firm, J & J Canadian Grants. “It appears that the directors of J & J are working on concert with a medical practitioner to generate (DTCs) containing false or deceptive statements,” documents filed in support of the search warrant said. A J & J lawyer told the Star the warrant contains “allegations” and no charges have been laid.
Several other firms in Canada charge anywhere from 15 to 25 per cent and claim migraines and vaguely described mental and physical disorders can lead to paydays.
Canada Revenue has sent letters to National Benefit clients who were assessed by David Neger, a recent graduate of Sackler School of Medicine in Israel, who is unlicensed to practice medicine. Neger is Medjuck’s brother-in-law.
Medjuck said of his brother-in-law: “Dr. Neger is a doctor with a valid medical degree regardless of where he is or is not entitled to practice. . . . Dr. Neger is one of a number of health care professionals that we have referred clients to in the past.”
One of the clients contacted by Canada Revenue is Steven Fishman. Fishman, who has a heart condition, said he visited Neger at National Benefit headquarters and that Neger drew his blood and measured his blood pressure. Fishman got a letter from Canada Revenue saying that Neger was not authorized to sign the forms, and now Fishman fears he will have to return the $9,800 credit.
“What really got to me was, you know, it was a doctor’s office. There was a nurse there,” Fishman said. “It turns out he wasn’t (a licensed doctor). They didn’t even ask for my health card.”
More than a week after his interview, in which Fishman was willing to talk about his experience, Fishman contacted the Star and said he made his comments “under duress” and that he wished to retract everything.
Neger, who calls himself a “physician,” said in an email he has never drawn the blood of a National Benefit client. “I have never certified any document for a patient who did not have a legitimate impairment,” Neger said in an email to the Star, adding that while he is not on staff he did he see patients referred to him by the company.
Neger assessed physical impairments, anxiety issues and ADHD, and he said he was paid $200 per assessment.
Some clients who visited Neger but were asked by the taxman to redo their disability assessment went to see Dr. Jack Cowan.
The Star reviewed Cowan and Neger’s credentials and found neither was qualified to sign tax credit applications. Ontario’s doctor regulator mistakenly told National Benefit Cowan could assess patients and sign forms, and Neger said Canada Revenue gave him approval to assess National Benefit clients.
Cowan – who was disciplined by the College of Physicians and Surgeons of Ontario in 2003 after waving a rusted, .38-calibre Smith and Wesson revolver at his receptionist and falling asleep in front of patients while addicted to painkillers, among other misconduct – said he has worked as a “staff” doctor at National Benefit the last several months. Cowan would usually visit patients at the office, typically seeing four to eight in an evening. The job included making “house calls.”
“They welcomed me on board as one of the medical staff,” Cowan said, adding he saw 20 to 24 NBA clients. “NBA recruited the patients for me. I don’t want to say recruited. They provided the people for me to assess. I would try to pick out the salient medical problem that would apply for the credit.”
When asked if he felt the federal program is flawed, Cowan said: “Yes, too lenient. On the other hand, some of the people applying for it, they need extra money to live as human beings.”
National Benefit clients, who had never visited Cowan before, had their “disability” certified after an appointment that lasted anywhere from 30 to 60 minutes. In some cases, Cowan certified that the disability had seriously affected the patient going back 10 years.
National Benefit’s Medjuck said the company stopped referring patients to Cowan last month when the doctor said he was unavailable. Medjuck also said very few clients need doctor referrals.
Several sources interviewed by the Star questioned why someone with a serious disability would need to see someone like Cowan.
Former National Benefit employee, Charlie Bobrowsky, who worked as Medjuck’s director of operations until mid-2009 and then formed his own company, said he would expect anyone with a legitimate, serious disability to already have a doctor familiar with the condition: “I’ve never seen anyone at my new firm who is eligible who has not already spoken to a doctor about it.”
Some NBA clients are also encouraged to find family members who can claim a tax credit for acting as the client’s caregiver or financial supporter, also known as a “sponsor.”
Kevin Jackson of Etobicoke said that the National Benefit encouraged him to find a sponsor to increase his refund for depression and attention deficit disorder, but he refused.
“They tried to get me to say that I had family that pays for me, in order to increase the benefit by thousands of dollars,” Jackson said. “And they kept asking and they kept asking, over and over, trying to get me to do that. But I said I couldn’t. Nobody did. I paid my own bills. They said, ‘You can get $10,000 if you get a family member to say that.’ They never asked me to lie but they strongly encouraged me.”
Another client received two National Benefit letters over seven months reminding him of the extra money to be had if he claimed a family member as a sponsor.
The National Benefit said it has many satisfied customers, and the company provided contact information for two, including: Randy Boudreau, 43, who has multiple sclerosis and praised the company’s “idiot-proof” process; and Richard Fleming, 56, of Webbwood, Ont., who had to retire from General Motors in 1994 due to sacroiliac joint disorder that caused pain in his lower back. Fleming did not know he could apply for a tax credit until a friend gave him the company’s brochure. He received more than $10,000.
“It’s money that I never knew that I was entitled to,” Fleming said. “I don’t mind paying 30 per cent for something I never knew existed. . . . I still received 70 per cent of found money.”
Ontario NDP leader Andrea Horwath wants the Ontario Ministry of Consumer Services to investigate the more than 10 disability tax credit companies in the province. “From where I sit, it’s a scam,” she said. “What these companies are doing is preying on folks. The exorbitant rates, like 25 and 30 per cent – I mean, give me a break. It’s just wrong.”
Three NDP MPs in the Hamilton area have been hosting free tax seminars in their ridings to help constituents, especially seniors, apply for the disability tax credit.
Meanwhile, Dr. Cowan – who lost his large Wasaga Beach house to a bank and filed for bankruptcy shortly before starting work at NBA – said that his only sources of income are his $1,720 monthly pension and the money he gets from NBA and two other disability tax credit firms.
“If I don’t continue working for these disability companies, I don’t know what I’m going to do,” said Cowan, who recently applied for his own disability tax credit. He said he suffers from chronic lymphatic leukemia and submitted a claim seeking benefits going back 10 years.