Financial Post: January 30, 2013. All Rights Reserved.
Greed and dishonesty offend, but the lying and cover-up often prove fatal, as the judgment in Mykki Cavic v. Costco Wholesale Canada Ltd. shows.
Mykki Cavic was a night floor merchandise supervisor and 19-year employee of Costco, responsible for more than 20 staff. Her compensation included coverage in a group benefit plan. Self-insured, Costco paid the claims, but retained Manulife to administer its plan. Manulife would refer a claim it considered dubious or fraudulent to Costco, which would in turn investigate.
Both Costco and Manulife were unaware that Cavic’s benefits profile listed a non-existent daughter, Sarah-Eve Dore. Cavic would take the receipts from medical providers for paramedical treatments and superimpose her phantom daughter’s name on them, then submit the claims for reimbursement. When Manulife called to verify Sarah-Eve Dore’s identity, Cavic informed them she was her daughter.
Not satisfied, Manulife decided to conduct a random audit. It followed up with the service providers who confirmed that Dore was not a patient and had never received the treatments being billed. After being notified of this, Costco summoned Cavic to a series of interviews.
At the initial session, Cavic was told that there was a possible fraudulent claim and was asked whether she had any response. She said she did not. At the second meeting, she was shown the documentation and was asked questions about the potential falsification.
Cavic then responded that she was aware of a fictitious person on her profile and that she had attempted for years to have the name removed without success. She acknowledged the signatures on the claim forms were hers, but denied falsifying the supporting documentation. Her story was that someone had broken into her house, taken the signed forms and hacked into her computer to submit the claims online.
Costco did not believe Cavic’s story and fired her for breach of trust. She sued, asserting this action was excessive in light of her length of employment.
Justice Carole J. Brown of the Ontario Superior Court of Justice found her dismissal warranted. She said falsifying and submitting medical benefits forms, lying to Manulife about the identity of Sara-Eve Dore, and failing to admit to her wrongdoing during her interviews went to the core of Cavic’s position of trust as a manager.
Employers should take the following steps when confronted with evidence of employee dishonesty:
Appoint a lead investigator While he or she may have assistance from others, it is important that one individual have ultimate responsibility for collecting the evidence and ensuring the right interviews take place.
Give the employee a chance to respond The courts expect that an employee has been given the right to answer accusations and that the employer consider his or her explanations. An added benefit here is if the employee is untruthful in his or her interviews, that compounds the wrongdoing and constitutes additional and often critical grounds for just cause.
Ask open-ended questions No matter how persuasive the evidence may be of the employee’s guilt, he or she must be given a fair hearing. It was, for example, reasonable for Costco to ask Cavic if she had anything to say about a fraudulent insurance claim.
Inform the employee of his or her duty to be truthful The employee will then treat the interview with the seriousness it deserves and not claim later that they did not realize the importance of their answers.
Set out expectations Costco’s handbook underlined the requirement that management was expected to act with the utmost integrity. These statements assisted the court in finding that Cavic’s behaviour undermined the trust required in the employment relationship.
Record the interviews At trial, Cavic’s version of what happened and what she said at her investigative meetings were at odds with the employer’s statements. Fortunately for Costco, the judge did not accept Cavic’s testimony as credible and favoured the employer’s witnesses. This would not have been an issue had the interviews been recorded.