BUSINESSEmbezzled: When it happens to youWhen a trusted staff member steals from a practice, physicians feel betrayal, violation and embarrassment. No one is immune. Here is how to protect yourself.By Leigh Page, amednews staff. April 2, 2001. When an employee is caught embezzling from a physician's practice, the financial losses are often overshadowed by the emotional fallout -- a loss of trust, a sense of violation and lingering guilt about not minding the till. For Deborah Silverman, MD, the emotional toll was so great that she quit her solo family practice in Harrison, Ohio, just west of Cincinnati, and now earns her living playing guitar at seniors' homes and writing the occasional medical article. "You just can't believe that someone you trusted and cared about would do something like that," Dr. Silverman said. It was last April when one of Dr. Silverman's employees told her that the office's bookkeeper had been pocketing co-payments of $10 or $15 that patients paid at the front desk, then adjusting the books to hide it. The case went to criminal court, and on Jan. 3 the bookkeeper, identified in court records as Tina L. Spangel of Lawrenceburg, Ind., pleaded guilty to stealing $1,800. The co-worker discovered the crime a day or two after Spangel resigned from the practice and she took over the books, Dr. Silverman said. The co-worker, who had been assisting on the clinical side of the practice, noticed inconsistencies in the books and asked her husband what she should do. "You've got to tell Dr. Silverman or else she'll think you did it," he told her, according to Dr. Silverman. Confronted by Dr. Silverman with the accusation of theft, Spangel denied it and continued to do so until the day she went to court, the physician said. Dr. Silverman said she did not talk to Spangel again and does not know why she changed her plea, which initially was "not guilty." Spangel was ordered to pay back the money, but in late February she had not yet started making payments, according to her attorney, William H. Mikita. Unlike Dr. Silverman, most physicians who have been embezzled by their employees do not seek prosecution, practice management experts say. These doctors may be ashamed it happened, may want to protect the worker or think they may recoup more money by settling the matter privately. Physicians rarely stop practicing because of a theft, but strong emotional reactions like Dr. Silverman's are common, said David Scroggins, a management consultant with Clayton L. Scroggins Associates in Cincinnati. Helping about 1,200 physicians throughout Ohio, Indiana and Kentucky run their practices more efficiently, the firm uncovers one or two embezzlement cases each year, but it was not involved in Dr. Silverman's case. Scroggins said even when the amount stolen runs into the six figures -- which happens when senior staff steal from large practices -- it's "far, far more than the money. It's really a loss of faith and trust." Embezzlers steal for all sorts of reasons, have all kinds of strategies and can be hard to root out, the experts say. "I think I'm pretty savvy, but I don't think I'm smart enough to detect all of this," said Dorothy Sweeney, vice president of The Health Care Group, a practice adviser in Plymouth Meeting, Pa. Sweeney and others say some employees simply pilfer cash co-payments to cover an occasional lunch. Others deposit checks with forged signatures into their own accounts or submit false claims to insurers. And some get very sophisticated. Elizabeth Woodcock, a practice management adviser in Atlanta, recalled that an employee in charge of supplies at a large practice actually created her own company that bought supplies and sold them to the practice at a 10% higher price. Dr. Silverman said she could not understand why Spangel stole from her, and experts agree that it is often baffling. Scroggins said employees often give reasons for stealing. They may suddenly have new expenses, such as a mother in a nursing home or a husband out of a job. But in many other cases, he said, they have no financial problems and could be motivated by feelings of being unappreciated or because they like the challenge. Some of the most difficult and costly cases involve highly paid and highly trusted employees, Scroggins said. In one such case, a doctor at a large practice believed his office manager was living beyond his means, but he could not convince his partners to investigate, Scroggins recalled. "Look how much he does for us!" they protested. "We depend on him." He even lent them his fancy car. But their skepticism melted away when the man started to build a tennis court with lights. The doctor thought, "I built a tennis court, too, but I couldn't afford the lights." "It was the turning point in the case," Scroggins recalled. An investigation revealed that the office manager had cashed almost $100,000 in checks to the practice over many years. He was fired but wasn't reported to the police because he agreed to pay all the money back. He managed to qualify for a bank loan to cover the full amount, Scroggins said. In many cases, it is all too easy for employees to steal because no one is watching them. Woodcock recalls that one ob-gyn practice gave its office manager sole access to its checking account. She wrote herself checks from it without fear of the doctors accessing the account -- until somebody investigated. Dr. Silverman regrets her own lack of attention to practice finances. "I have to admit that I was remiss and was not checking regularly," she said. "I was working until 9, 10, 11 at night writing up charts and returning phone calls. I didn't have time for these things." Getting the bad newsScroggins said embezzlement often comes to light when doctors in a practice are working harder than ever for less money and hire a firm such as his own to perform a detailed audit. Embezzlement is not at the top of his mind, but he keeps his eye out for telltale clues, such as numbers that do not add up. When Scroggins identifies a dishonest employee, "the doctor doesn't always pat us on the back. He can be mad at us," he said. "You lose clients over this." Doctors, he said, go through a gamut of conflicting emotions about a theft. First they feel angry and hurt and want to turn the employee over to the police to make sure it never happens again. Then they feel embarrassed and ashamed that they let it happen and want to settle the case in secrecy. In small practices in particular, doctors and staff have close friendships that are hard to lay aside. Dr. Silverman had just two employees -- one to do the books and the other to assist in clinical work -- and "we talked a lot," she recalled. Her relationship with her bookkeeper, Spangel, "wasn't 'close friends' on an equal par," she said, "but we were friendly. I thought it was a good relationship." In another case, Scroggins recalls that the bookkeeper in one small practice was a good friend of the doctor and even baby-sat his children. Scroggins asked her to meet with him and the doctor to discuss an irregularity. When she did not show up, the agitated physician asked the woman's daughter to check on her. She had passed out from an overdose on her bathroom floor. The woman was revived, but the doctor was "really shaken," Scroggins recalled. "He just wanted it over with." He asked her to pay back a fraction of what she took and let her go without pressing charges. Even Dr. Silverman to this day is somewhat protective of Spangel, refusing to identify her by name to AMNews, and saying that she wants "no further retribution" against Spangel. Freed to steal againThough experts say it's rare for doctors to prosecute a dishonest employee, as Dr. Silverman did, they wish that more doctors would do so. Without a conviction, former employers are wary about saying anything to a prospective employer for fear of a slander lawsuit. As a result, the next practice may hire someone without knowing anything about his or her dishonest past. Spangel was sentenced Feb. 5 to two years' probation and 200 hours of community service and was ordered to pay back the money. Through her lawyer, she declined to be interviewed for this article. The case took up a great deal of Dr. Silverman's time, but she said she thinks it was worth it. Without fear of a lawsuit, she and others can warn prospective employers who want to hire Spangel. "These people are rarely taken to court, so they are free to go into the next practice," Woodcock said, adding that of five recent cases she knows of, only one was reported to the police. Even bonding insurers, who have no qualms about prosecuting dishonest employees, usually don't go to the police, Scroggins reports. Bonding insurance is often attached as a rider to a practice's general insurance policy. These insurers will pay doctors their proven losses and then try to recoup the money in a signed settlement with the dishonest employee. Private settlements are completed faster and usually net more money than a court proceeding, Scroggins added. In many cases, it cannot be absolutely proven in court that the employee took all the money he or she was suspected of stealing. The former employee often will agree to pay more in a private settlement to avoid the stain of a criminal conviction. Recalling her own calls to previous employers when she hired Spangel, Dr. Silverman recalls that one employer might have had something to tell her. The office manager at one practice said Spangel was good and reliable, but hesitated when asked if she would hire her again. "At the time I thought, 'Why is she hesitating?' " Dr. Silverman said. "Maybe I know why now." ADDITIONAL INFORMATION:What you can do to protect yourselfAdvice from practice management consultants on how to stop embezzlement from happening to you: Check references. Former employers generally won't reveal dishonest employees, but carefully thought-out questions can reveal clues that can be followed up.
What you should do when an employee stealsAdvice from employment lawyers and practice management consultants on what options you have if you learn an employee has embezzled from you: Get a signed confession. In this statement, the employee promises to pay the money back over a designated period of time. This should be signed before the employee decides that the evidence against him or her is not strong enough.
Copyright 2001 American Medical Association. All rights reserved.
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