5 Tips to Prevent, Detect and Deter Fraud in your Dental Practice

Run your practice like you did when you first owned it.  Do you remember when you first purchased your practice and cash was tight?  You had a huge loan payment, payroll to worry about, equipment to purchase, and a waiting room that needed some final touches.  You not only knew your daily production, you knew how much you were supposed to collect and when you were supposed to collect it.  You had your finger on the pulse of your practice and your staff knew it.  Don’t relax too much as your practice grows; stay on top of the business side of your practice. 

Engage a Dental CPA to do more than just prepare your tax return.  Your CPA should be engaged to closely review your financial information at least twice a year.  A detailed analysis of your financials including percentage and ratio comparisons may reveal production, adjustments, collections or expense relationships that just don’t make sense and may indicate possible fraud.   In addition, Dental CPA’s can compare your practice results with industry benchmarks and can help investigate areas that are out of line with industry norms.   If you’re only consulting with your CPA at tax time you should consider upgrading your services.

Pay Close Attention to the behavior of your front desk staff.   The greatest opportunity for embezzlement in your practice is by your front desk staff.  There are countless schemes that can be perpetrated by these trusted employees.  If your front desk person is extremely territorial so much that they avoid taking vacations, become upset when someone attempts to use their computer or hostile with outside consultants hired to improve practice results – you may have a fraud concern.   In addition, if your front desk person seems to be living beyond their means; you should take notice.  There may be a perfectly reasonable explanation for why your front desk person is driving the latest model BMW, is wearing the latest designer fashions straight off of a New York runway and carrying the latest designer handbags.  They could simply be gifts.  You just need to make sure they’re not gifts from you.

Have a Strong “Tone at the Top”.   As the practice owner you are setting the ethical climate of your company.  Include an ethics statement in your employee handbook as well as written fraud policies and procedures.  Discuss fraud concerns openly with your staff in a non-accusatory manner and inform them that fraud will not be tolerated in your practice.  Let employees know that if they embezzle, you will catch it.

Implement Bonus & Incentive Programs   Employees that feel valued and fairly compensated are less likely to find other ways to increase their earnings.  Set achievable goals for staff and reward outstanding performances with periodic bonuses or gift cards from a favorite store or restaurant. Not only will these programs increase staff productivity, they’ll also increase staff morale.

If you’d like to further discuss any fraud concerns within your practice or are interested in engaging a Dental CPA for ongoing accounting or tax services, please contact me, Kim Conlin, CPA, FCPA at kconlin@nlgroup.com.

Pitfalls for a Dentist to Avoid in Employer-Employee Relationships

Here is guest post from our friend Mike Limsky, Esq. 

Without proper planning, dentists may find themselves at odds with their own employees. The potential problems are many and include misunderstandings, resentments, and even lawsuits. As a Maryland attorney with 25 years of experience representing dentists and other medical professionals, I have seen firsthand the various pitfalls a typical employer-employee relationship may suffer. By taking proper precautions, however, many of these problems can be prevented. When counseling current and prospective clients, we often advise the following:

1. Maintain good personnel records.  Maintaining thorough and accurate records of all employees and independent contractors is the first step toward avoiding problems. These records should include the terms under which the individual is employed, including compensation amounts, bonus calculations, vacation allowances, continuing education provisions, and other benefits. Detailed information about any personnel problems, such as the nature of the matter, the date of each incident, and any disciplinary action taken, should also be included.
2. Avoid written office policies and employee manuals.  This may seem counter-intuitive, but we generally discourage clients from providing employees with written office policies or employee manuals. The problem is that employers may unwittingly deviate from the procedures specified in these documents. Especially when matters like compensation and termination of staff are involved, such deviations can lead to lawsuits, with your own employee manual as a primary exhibit.
3. Require employment agreements with restrictive covenants.  We strongly urge employers to have their professional and administrative staff sign employment agreements that include an adequate and enforceable restrictive covenant. Without these covenants in place, a dental practice may face unfair competition from a current or former employee whose activities were not properly limited for the benefit of the employer. For example, an employee could leave the practice and attempt to hire one of your other employees, market to your patients, or make off with office records.
4. Provide required post-termination compensation.  If an employee’s compensation includes a percentage of his or her collections, then as a matter of law, the employee may continue to receive such compensation after leaving the practice. Although the employee would no longer receive any base pay, he or she should still receive the percentage of collections attributable to his or her work. Employers who fail to provide such post-termination compensation may be subject to treble (“triple”) damages.
5. Be cautious about “independent contractors.”  Employers should be extremely cautious when attempting to hire someone as an independent contractor. Simply calling the individual an independent contract will not be enough; the IRS may conduct an investigation to determine whether the classification is appropriate. If the IRS concludes that the individual is not an independent contractor but an employee, the employer may be found liable for any deficiency in withholding taxes and the accrued interest and may be subject to stiff penalties. Before classifying a new hire as an independent contractor, the employer is strongly advised to seek the advice of an attorney or CPA to avoid running afoul of IRS rules and regulations.
6. Avoid common-sense problems.  Avoiding some pitfalls in the employer-employee relationship should be a matter of common sense. The following problems, however, occur often enough to make them worth mentioning:
   i.      Intimate relationships in the workplace. Employers should discourage their staff members from engaging in intimate relationships with other employees, especially between supervisors and subordinates.
   ii.      Cash payments to staff. Providing staffers with cash payments for compensation, reimbursement, etc., should be avoided. Issuing checks instead ensures a traceable paper trail in case a problem arises later.
   iii.      Inconsistent treatment of staff. All staff should be treated with the same degree of professional courtesy and respect.
   iv.      Denying overtime pay.  Be sure to follow state law requirements for overtime pay, which may include certain exceptions.
   v.      Discriminatory practices.  Decisions about matters like terminating an employee, providing bonuses, or giving promotions should not be based on characteristics such as age, gender, disability, religion, race, sexual orientation, etc.
7. Retain specialized professional advisers.  Before retaining an attorney, CPA, or other professional, look for someone who has extensive experience serving dental practices and whose client base is made up largely of dental practitioners. This experience and familiarity will be an essential benefit as you navigate the legal and professional intricacies that distinguish dentistry from other enterprises.

Working with dentists over the years has shown how often problems can arise between an employer and the staff. More importantly, it has enabled us to develop effective ways to prevent many of these problems before they occur. By taking sensible precautions, dentists can save themselves time, money, and a lot of stress.

Michael R. Limsky is a partner at the Maryland law firm of Summerfield, Willen, Silverberg & Limsky, LLC. His extensive experience as a business and corporate lawyer includes a special emphasis on the unique needs of dentists and other medical professionals. Please remember that the information contained in this article is intended to provide general information about legal topics and should not be construed as legal advice. Mr. Limsky can be reached at mlimsky@swsl-law.com or (410) 363-4444.

Are Those Images on Your Dental Website Really Yours?

One of our dental clients received a letter recently from Getty Images demanding a settlement payment for using Getty's images without a valid license.

I was asked if it was legitimate.

Yes, it is.

Call it what you like, scam, extortion, mean spirited, etc…

It doesn't matter - the law is on Getty’s side.

They have all the documentation and facts. Without a valid, up-to-date license to use the images on your site, you will lose in court.

Here is a paragraph from WomenInBusiness on About.com talking about how Getty finds you: 


Getty uses automated robots that crawl the Internet looking for its images. Getty's tools are so sophisticated that if you use even a part of their images in a logo, banner, or button, they can recognize an unlicensed image. Their crawlers can locate images that have been altered, inverted, flipped or turned upside down, regardless of what you rename the image file.

When a Getty image is found, it is compared to their license database. If there is no match between the image and the site where it is found, they send a snap shot of the image(s) found on your site, the name of the image (as they sell it) and demand a huge sum of money for copyright infringement.

The minimum fine is $1,500 plus you pay all court and legal costs.

The maximum fine is $150,000 and you pay for everyone’s legal fees and court costs.

This is per occurrence.

If you hired a web firm to build your site and you did not get warranties/indemnification from them that all the content was original/unique/legally obtained, you are the one who is liable.

Again, hate it or love it (if you are Getty) this is the law.

From what I have read, you can negotiate them down slightly in the fines.

I've also read that many other license holders of images besides Getty are getting into the game, because anyone can go to Google images and right click copy/paste almost anything. And the onus is on you to find the owner of the image, not on them to provide it for you.

What can you do?

1.     Check and see if you have up-to-date valid license agreements for all of the images on your website (and any printed collateral material).

2.     If you don’t, remove the pictures and replace with legally obtained pictures.

3.     Ask you web design firm (if you outsourced this) for copies of all the licenses for content/images.

4.     We hire professional photographers to take pictures of our offices, staff and client’s offices. We pay between $175 - $600 for a full shoot including post production editing. We also retain the full legal rights of usage of these images (and trust me, if someone stole them and tried to pass them off as their own, they would get a letter from me).

How can you tell if you have images on your website that are used elsewhere?

1.     Go to www.google.com

2.     Select Images

3.     In the right hand portion of the search bar is a camera icon, click on it

4.     Go to an image on your website and right click on it

5.     Select copy image url

6.     Paste that into the Google Image camera icon search bar

Lessons Learned as a Dentist - The Team of Retirement and Its Members

Here is another guest post from our client Dr. Lurie.

The "Team of Retirement" includes:

            The Accountant.   He is the Chairman of the Board.  In my opinion, the doctor is on the board, but the team as a whole makes the key decisions that generate and govern the progress of the practice.  He is also the day-to-day advisor and confidant and his staff aids him in the doctor's role as the "face" of the practice.  This is a concept that is difficult for many practitioners.  He is instrumental in budget, goal setting and steering a path that is the "dream" of the doctor's  plan as to where he wants to go and how this becomes a reality for him and his family.

            The Attorney:  This speaks for itself.  Obviously, an attorney with corporate law experience and knowledge is important. If you needed a general surgeon, would you go to a mid-wife? A good corporate attorney is knowledgeable about the business community, has access to business deals and transcends the practice into other areas including investments.

            The Insurance Broker:  This also speaks for itself but the doctor must be aware of constant tinkering with the plan as age, circumstances, family, investments, health and the like change and evolve.

            The Investment Counselor:  He is key to long term goals and he may be part of the Accountants team (on site) or he may be brought to the table for a particular area of expertise or exploration.  Again, his expertise and evaluation and recommendations will vary with the age of the practitioner and with goal-setting as maturity occurs.  At some point, needs and wants will come into play. 

            The Doctor and Spouse:  Obviously, he drives the ship.  He is the face of the practice as I stated above, but is also the dreamer, goal-setter, the provider, writes the checks and carries the weight of the entire "Team" on his shoulders.  That is why the team is so vital and it is so important to be in the correct hands.  This family of people must coordinate, cajole and formulate a cohesive yet comfortable plan for the doctor to go forth every day into his environment.  He needs their support and they both (doctor and team) must be able to listen and care.  Most importantly, for me, there must be love.  There must be a feeling that this is truly a team, a family, and a togetherness that is based on mutual love and respect and just not the words of insincerity or the business to make money.  If the latter is so, then there is no fun, no joy in what we do and no self-respect for ourselves and for the profession.  As scripture says "GOD IS LOVE".           

I was fortunate to have such a team working with and for me for my fifty (50) years.  So this is a Lesson Learned without a mistake! Did we make mistakes - of course.  But you get my point, "it seems to me". 

More Mistakes Made and Lessons Learned soon. 

Dr. Donald B. Lurie

email:  donald.lurie@att.net

Phone:     717-235-0764

Cell:         410-218-2228