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Employee Dishonesty: What Should I Look For?

by William Hiltz

I have been investigating thefts committed against dentists since 2004 and the one question I’ve always been asked by practice owners is; “What should I be looking for?”

This is an excellent question and after years of answering it, I finally decided to create an online list of the things that dentists should be looking for with respect to employee dishonesty. This online list (described later) was designed after years of observing the actions, and behaviors of these perpetrators.

For many dentists, the mere suspicion that their employee is stealing will cause them to face a dilemma. Moreover, even when a dentist is faced with “evidence” that their employee is embezzling, they often will not confront the employee.

That’s not surprising. No one likes confrontation, and dentists tend to avoid it more than most people. The majority of dentists are highly ethical, inherently kind, very trusting, and exceptionally non-confrontational people. Because of these traits, they are sometimes slow to judge, and they put off “going with their gut” when they suspect an employee of dishonesty. They can experience feelings of guilt when suspecting someone of criminal activity and fear doing anything unless they have “absolute proof” of stealing.

Some will refuse to accept that a trusted employee could be stealing, and they continue to ignore the issue and remain in denial. They go on – business as usual – until they come to the realization that they are working harder, seeing more patients, and it’s not translating into more money in their bank account. By this time, many will have started to feel the effects of financial hardship and it disturbs me to hear that another embezzled dentist was forced to dip into their own line of credit to pay practice expenses; all while the thief was still working in their practice.

It’s usually at this time that practice owners start to examine their reports and business records. They will do this for days, weeks, and sometimes months; poring over bank records, credit cards and practice reports trying to diagnose the existence and extent of the damage, until they become exhausted, stressed, overworked, and are forced to resolve their concerns

The solution for some is to keep things quiet and on the downlow. They rationalize that the best decision it to just “let the employee go” and move on. Unfortunately, this choice is fraught with significant and serious problems, which inevitably show up after the thief is long gone, and very awkward when you learn that the thief is working in another practice in your area.

Dental office theft is common.

The widely published and agreed upon statistics say that 6 out of 10 dentists will be a victim of employee dishonesty. It doesn’t matter if you practice alone, in a group, or whether your practice is rural or urban; odds are that at some point in time an employee will decide to steal.

Dishonest employees will find ways to understate fees, conceal payments, create false transactions, pocket co-payments, forge signatures, abuse credit cards, and the list goes on. The sad reality is, when an employee is intent on taking your money, they will find a way to do it.

Usually the stealing starts “slow and low”. The thief will steal a small amount then wait a week, a month or more and when the theft goes unnoticed, they will repeat the process with increasing frequency and confidence. Over time, they will adapt and refine their schemes and stealing becomes just another part of their “job.”

These schemes can go on for months and years, with practices losing tens to hundreds of thousands of dollars.

In order to steal, the perpetrators invariably will adulterate patient records to conceal their crime. When confronted, a dishonest employee may erase information, shred documents and remove patient charts and other information from your practice to conceal evidence. When this happens, failure to notify the proper regulatory body can negatively impact your license to practice dentistry.

The key to early detection is to monitor employee behavior.

Most dental embezzlers are first-time criminals whose fear of being caught causes them to behave in odd or erratic ways.

When a person steals, their primary goal is to not get caught. This requires the employee to conceal their thefts so as not to arouse suspicion. The embezzler is on constant alert and will exhibit “red-flag” behaviors that are highly correlated with dishonest activity.

Observing behaviors that are consistent with theft is the first sign something is likely wrong. Here are a few red-flag behaviors that dentists need be aware of.

• Be aware of an employee who has visible signs of money problems. These employees may make comments or complain about not having enough money. The cause of their money problems may be visible to the dentist; things like gambling, alcohol or drug addiction, marital problems, calls from collection agencies at work, large medical bills or a spouse who lost their job.

• Be aware of an employee who spends time alone in the office after hours or always comes in early.

• Be aware that dishonest employees will often refuse to take vacation or come in to work when they are sick and should have stayed at home.

• Employee who steal often become “jumpy” when someone tries to help them with their duties. They will resist the involvement of others in their work.

• Be aware of an employee who is resistant to change. Embezzlers do not want changes in things like practice management software, bookkeeping, accounting or consulting services.

• Embezzlers are often slow to respond to your requests for information. The report you asked for today may not show up on your desk until tomorrow. They often will become annoyed when asked reasonable questions about financial transactions or dental insurance claims.

• Some embezzlers will attempt to cover up their actions by wanting you to believe that they are always one step ahead and keeping you informed. This perception of organization is essential to maintain the bond of trust that is required for them to steal.

When you observe one or more of these behavioral red-flags, there is probable cause for concern and this should warrant a further examination or a consultation with a dental fraud examiner.

I recommend that you look for red-flag behaviors in your practice at regular intervals, so when a red-flag is observed, you can take appropriate action.

Lastly, make sure you have “financial crime” or “employee dishonesty” insurance. If you are the victim of embezzlement, you can file a claim against your dishonesty insurance policy to offset your losses and help to pay for any professional and legal expenses incurred to bring the thief to justice.

Want to know more about red flags? The author has developed a free, confidential and anonymous embezzlement red-flag assessment for dentists and it is available here: www.dentalfraudbusters.com

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