Only Trusted Staff Can Defraud You

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I talk to many dentists and I am surprised at the number of dentists that have been defrauded by their staff. There are many ways that individuals can defraud you. Generally it is not more than one employee. Due to the limited number of staff in some practices it is difficult to divide up the duties to have good internal control. If multiple staff members act in collusion they could get away with gross fraud for years unless the doctor or their spouse insert themselves into the system to keep an overview of certain key reports such as the deleted treatment or cancelled charges reports.

Some of the fraud is as simple as taking patient cheques to the bank to have them cashed “for the dentist” and then covering up the theft by cancelling the charge to the patient. This can be very costly as you will have:

a) the loss of the cash or cheque

b) to pay the government income tax for the income recorded before it was stolen if the cover-up did not reduce the gross revenue (a “double whammy”)

c) the feeling of betrayal within the team – loss of focus for the team

Other types of fraud have more long reaching implications – particularly when insurance companies are involved. If a staff member sends in false claims and diverts the cheques it is difficult to detect – and creates another “double whammy”. The insurance company will demand repayment of the funds fraudulently paid “to the dentist” if the procedures were not performed on the insured person and the cheques were intercepted by the “trusted” staff member. This type of fraud can be avoided by a separation of duties whereby the person who opens the mail is not involved in the billing or insurance claims.

Different computer programs have different procedures, but all programs will print off daily sheets. These sheets should be reviewed by the dentist and signed and retained as a permanent record. All adjustments (write-offs, deleted treatment reports, cancelled charges, etc.) should be reviewed by the dentist, signed and retained

Even when a fraud is detected it is often impossible or very time consuming to determine the extent of the theft, with limited hope of getting the money back. Yes, you can terminate the employee (use a lawyer) but a lawsuit to recover the money or obtain a conviction is generally not an option. An ounce of prevention is worth a pound of cure. Certainly, when hiring new staff check all references – but this is only the first step. Setting up good internal control procedures in your practice with the assistance of your accountant is the best long term protection. There are courses in fraud protection for dentists if you want to get directly involved. There is no department in the dental community to register individuals who have defrauded their dentist. This means that individuals can go from practice to practice without a track record.

If an employee is not a trusted employee it is difficult for them to steal from you as you are monitoring their work. The trusted staff member is the only one that can defraud you if you do not have the internal control procedures to protect your practice.

If you have been defrauded and would like to anonymously relate your situation to me to report in future Professional Advisory issues, I would be more than pleased to receive the information and to disseminate it to the dental community with full anonymity for you.

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