Fraud 101: What you didn't learn in medical school

December 17, 2010

The most current Report to the Nation on Fraud by the Association of Certified Fraud Examiners estimates annual fraud at $952 billion, an increase of more than 46% from the 2008 figure of $652 billion.

Key Points

A DETAILED ACCOUNT

A month after our phone call, Robert recounted additional information about his office manager. She initially interviewed and was hired for a receptionist position in his practice. She excelled in the position for a year, at which time Robert was seeking an office manager.

Robert offered her the position, and she accepted. Robert placed much trust in her and delegated to her the task of examining and processing insurance payments every day. She had full access to the computer, mailbox, and office suite.

"I have a small operation, so it wasn't feasible to spread the duties among additional staff," he said. "In retrospect, I should have handled the key duties that involved accounts receivable and payables."

A year passed, and the practice didn't seem to be growing despite Robert's hard work.

"I noticed small things, such as insurance claims that were closed without payment and a lack of organization in the accounting," he told me. "I asked Linda a couple of times about the sloppy accounting and lack of practice growth. She told me that because many patients had switched insurance providers, she had to close claims from the previous insurers to bill the patients. I asked her for the records of the billings, and she told me that no one had told her how to do it and that she hadn't thought to record the billings. Basically, she supposedly sent the patients a bill and left the amount as unpaid on the accounts. I got upset that the accounts were a mess, but I didn't suspect that she was stealing."

Several months later, Robert got the gnawing feeling that something was not right. "I confronted her and asked for an explanation. She denied any wrongdoing and said that no one showed her how she was supposed to account for the payments and receivables. This was not true, but I let it go for some time," Robert said. "I waited for a day when no one was in the office, and I called up a sample of the insurance providers in the patient accounts with closed claims that had no payments attached. I asked for cancelled checks and found out that a lot of the checks didn't have my rubber stamp on the back but had a handwritten account number instead."

Robert then contacted that bank at which the checks were being deposited but was told that no information would be given to him about the accounts without a request from the police. "I then confronted Linda with the evidence again, and she finally broke down and admitted to the theft," he said. "I let her continue her explanation, and she stated that she was undergoing severe financial hardship, lack of family support, and medical expenses, and that she was doing it for her son."