Hiltz & Associates Blog
Fraud, Embezzlement and Risk in the Dental Office
It’s easy for busy doctors to trust their practice managers to manage their books and run the business side of operations.
But recent cases involving office managers who embezzled from practices show that trust can be misplaced. Doctors who don’t pay attention to office finances and fail to put checks and balances in place are making a big mistake.
It’s a lesson that Lanalee Araba Sam, M.D., an obstetrician/gynecologist practicing in the Fort Lauderdale area of Florida, learned the hard way. She calls it a cautionary tale for other practices.
“I had 8,000 patients and was drowning in bills,” Sam told the Sun Sentinel. An audit led to the arrest of office manager Ralphyna Wylette Thompkins, 35, of Miramar, Florida, who was charged with stealing $490,000 over five years from the business. Sam has sold the practice, Elite Obstetrics & Gynecology, but remains as its medical director.
Sam told detectives she got monthly financial statements from her office manager. “I take responsibility for not looking closer,” she said.
She’s not alone in putting misplaced trust in an employee. Consider these recent cases:
In Michigan, an Okemos woman, Sue Brownlee Jones, 59, faces charges of embezzling more than $150,000 from Total Family Health Care Plus, where she worked as the office manager, according to the Lansing State Journal.
After Jones quit abruptly last March, the office had an accountant go through financial records and a doctor affiliated with the practice contacted police the accountant found discrepancies.
In Georgia, an Athens woman started serving a four-year prison sentence earlier this month for stealing more than $300,000 from a medical practice where she was the office manager. Judy Reeves Flanagan, 65, purportedly embezzled the funds to finance her “addiction” to plastic surgery, according to the Athens Banner-Herald. She stole the money from the dermatologist for whom she worked over an eight-year period.
In Pennsylvania, an office manager drove the medical practice where she worked to the brink of financial ruin by stealing more than $415,000 over a six-year span. Michelle Lightbourne, 37, was sentenced on January 25 to serve one to three years in state prison, according to Bucks Local News. She worked for 14 years at Doylestown Internal Medicine, the last seven as office manager.
The thieves were creative in how they stole from the medical practices, but there were common tactics. For example, managers:
- gave themselves raises without permission
- took unauthorized overtime
- used signature stamps intended for emergencies to sign checks
- deposited or cashed checks from personal bank accounts
- hired outside companies but then didn’t pay them
- deposited patients’ cash payments in their own accounts
- cancelled insurance policies and pocketed the premiums
They used the stolen money to pay for everything from concert tickets to catering a wedding.
The thefts had devastating effects on the practices.
For example, by the time Lightbourne’s theft was discovered, the Pennsylvania practice was broke, unable to pay its 19 employees or meet operating expenses, Bucks Local News reported. Lightbourne has already laid off four workers and the practice’s three doctors borrowed more than $100,000 from their retirement funds to pay other workers.
Fifteen workers lost their healthcare insurance for six weeks because she did not pay the premiums.
For the doctors, the theft by a trusted employee was also devastating. Sam, for instance, was close with office staff, taking the office manager and other employees on three cruise vacations and other trips.
“What’s been lost is more than money. What’s been lost is my faith in humanity,” Sam told the newspaper.
At Lightbourne’s sentencing hearing, Philip A. Myers, M.D., one of the partners in the practice, described the impact of her theft, saying it was “devastating to find out someone who was part of the practice family for 14 years was stealing from us for years; even more devastating [was] the harm to those who lost their jobs, lost healthcare, worried about job security,” he said, according to the news report.
These cases are a warning that practices must have mechanisms in place to check and verify the finances of their business. That’s true no matter how much practice doctors’ may trust an employee and no matter how long they have been employed.
As FierceHealthcare has reported, practices must watch for warning signs that something is wrong.
Red flags include an employee who suddenly has money to spare, presents a stack of checks that need signing at the busiest time of the day, is reluctant to take time off or share tasks with others or is secretive about their work.
Practices should require all employees take vacations and can check their work when they are out of the office.