Secret Patients, Ghost Employees, and a DOL Investigation

HR Horror Stories
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Narrator: You’re about to listen to an episode of What the Hell Just Happened? Join Paul Edwards and his guests as they discuss interesting topics and solve some of our listeners submitted questions.
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Paul: And occasionally I’ll go off topic to talk about whatever I want. Think barbecue, space exploration, growing your business, and things that interest all of us.
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Paul: All right, this is the scary edition. Boo. This is our Halloween episode or one of our Halloween episodes., For What The Hell Just Happened? What the hell just happened is somebody did something scary who works in a practice, and now we’re going to talk about it. You know, I’ve been doing this a very long time, by the way, Jennie, welcome to the show.
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Jennie: Thanks, Paul.
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Paul: Jennie’s been doing this for a very long time doing this, meaning HR, hearing problem solving problems. And, you know, when you sit there, especially in my early days, I would go to any conference anywhere. All you had to do was say, Paul, will you go? And I was like, yes, yes, yes. And so I’d get to talk and share some stories and kind of, you know, but most importantly, I would just sit in the back of the room. And as these coaches are going over different scenarios, you have all these people raising their hand and saying, you won’t believe what happened in our practice. And so some of these stories are kind of scary. I guess they’re scary for me and Jenny, because we’re HR. And so we’re going to share some of them with you. I hope we have some kind of affects on this where we can make it scary and we can fly in ghosts. Jennie, that’s not very scary. First one I’m going to start with, which is, this is from the Wayback Machine. And I’ve seen this question, this scenario unfold a couple of different ways.
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Jennie: Yeah. I mean, you say you’ve seen this a long time ago. I’ve seen it recently.
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Paul: You’ve seen it recently. Okay. So in my story and my version of the scary story, a hygienist at a dental practice, for those of you that don’t know what a hygienist is. Everybody knows what a hygienist is, right? You never know unless you ask your. You know what? Unless you ask your payroll company, the difference between a hygienist and a dental assistant.
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Jennie: They don’t.
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Paul: They might not know what it is and therefore might not be able to help you classify them properly. And that in and of itself is scary, Jennie scary. It’s very scary. Okay, so what did hygienists do that was so scary? Well, she opened her own practice on Saturdays, Saturday mornings to be exact. She would open at seven a.m. and she would close sometime around one. For those of you who are listening to this, if you’re in healthcare, particularly if you’re in dentistry, you probably have some concerns about this. I don’t know if you know it or not, but hygienists aren’t supposed to run their own practices. In this instance, I have another one. In this instance, she was only doing hygiene or mostly doing hygiene as far as we know. And so what she did is she would just come in, she had her own key and she would come into the practice, open practice up and off she would go. She would see patients. If you’re on the YouTube channel, you could see me air quoting. If you’re listening to the podcast I’m air quoting, she would see patients and then do hygiene. Most importantly though, is that she would what, Jennie, what would she do with the money?
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Jennie: She would keep it. She would keep that money. She didn’t tell anybody at the office what she was doing. She didn’t keep patient records at the office. She didn’t chart them. She just took some cash and put it in her pocket.
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Paul: You know, in the face of this, this is just kind of theft, right? But, Jennie, what’s the scary part for the practice? Because the patients are being seen in.
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Jennie: Patients are being seen in your office. And there’s a lot of stuff going on here. And so, there’s risk to you as the business owner and as a dentist, your license, because you are probably supposed to be supervising this person. You’re responsible for what happens in your office. And also patients are going to be assuming they’re going to your practice.
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Paul: Which is how this kind of bubbled out. Someone came in with another problem and said, well, you’ve you, you just saw me last month. And they’re like, we don’t have a record of you here. And they’re like, how could you not have a record? I came in on a Saturday and they’re like, wait a minute.
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Jennie: We’re not open on Saturdays.
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Paul: We’re not open on Saturdays.
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Jennie: Mhm. And also, can you just imagine if anybody got hurt? And that could be someone slipped and fell or it could be a hygienist hurt the patient because they are not a doctor and they didn’t realize this employee or employee, this patient has some medical condition where they need it to be monitored for something. She didn’t catch it. They start bleeding. You know, there’s no one there to support the hygienist, hygienist doesn’t know how to resolve this emergency. You’re going to be on the hook for this. Your insurance probably isn’t going to cover you. And if this was, you know, the hygienist gets hurt in the office, your worker’s comp isn’t going to cover you.
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Paul: It’s definitely not going to cover that. Although she’d have to be insane to make a claim.
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Jennie: You’re right.
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Paul: My next version of this is the same one. However, she is doing dentistry. So she’s drilling and she’s filling. I don’t think, you know, she’s taking on crowns or endo or anything like that. Nonetheless, as a business owner, this is very scary for me because a liability for me, not knowing the dishonesty involved in it, I don’t know, I don’t know how many patients I have out there because it was in my practice. And I think that, we’ll talk about this a little bit more in some of the other scary stories. I think I got to report this, I think to protect myself, I might have to have the hygienist arrested for trespassing and what she’s done. I think I may have to go and report what has happened here. I think there’s probably some HIPAA violations going on here. I can’t think of one off the top of my head, but aren’t there always.
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Jennie: Well, you should have records and. Yeah. But um, but yeah, I mean, I think I would recommend you need to call your licensing board.
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Paul: I’d go to my attorney first.
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Jennie: Yeah. I mean, okay. Yeah. Go to your attorney first. Go to your business liability insurance. Curve your malpractice insurance. All those insurance people. If you have an attorney, call an attorney. If you don’t have an attorney, probably get one in this situation and maybe get some advice on how to handle this. But I would think that the best thing you can do to protect yourself is to self report it. And that means report it to the licensing authorities because you don’t want this to be caught in the future because maybe there was malpractice or what were. This just shouldn’t have happened. And you’re going to get in trouble later. Reporting it first is usually better because you can show I had nothing to do with this. And then also make a police report about it. And whether the police do something about it or not, is on them. But it’s just, again, you’re putting on record that this was not me. This was not authorized. I didn’t treat these people. This person was also just, you know, they’re essentially stealing from the practice. It’s probably not a case that’s going to go too far in the criminal world, but.
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Paul: I’m going to get rid of the hygienist.
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Jennie: They’re fired.
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Paul: They’re fired for cause. And I’m probably going to, not I’m probably, I’m going to report it to whoever your governing body is for your hygiene, she needs to or he needs to lose their license.
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Jennie: And, you know, a lot of this would be probably before you fire them, maybe suspend them once you find out. But talk to your attorney first, because there’s may be a situation where you have a conversation with this person before you tell them they’re fired. But maybe suggest if you tell me. Give me your who, your patient list. Give me the records. Tell me exactly what you did and you know, so we can try to rebuild trust and work together. And you’re going to fire them. But you want to get this information because you may need it in the future.
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Paul: Yeah, and on the one where they, the doctor and hygienist teamed up and were running their own practice. And then we’ve got the physical therapists that were running their own practice. Again, I think that, you know, to cover yourself, you take kind of this scary path of self reporting, which there is nothing scarier than saying, I’m going to raise my hand and say something wrong was happening at my business. I get it. I mean, I get why you don’t want to do it. Maybe that’s the scary part of this story.
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Jennie: You’re going to have to take some ownership of this in some way and self report it. And if there is, I never hear about, I know I’m an attorney and I believe in every state with, you know, we have our licensing boards and part of that there’s a confidential anonymous ethics hotline. So if I believe maybe I did something wrong or there’s a potential issue, I’m not sure what my ethical obligation is here with this client. I can call them and get advice. I don’t think that’s as standard in the medical world. I wish it were. And so that’s a way maybe call your association and see if anyone can help you, you know, guide you through. What should I do here?
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Paul: Okay. That was very scary. Now we need some more scary stories. So this next one is, it’s kind of interesting. I don’t know how scary it is, but it feels scary. Maybe. No. Yeah. It’s weird. We titled it the eBay Side Hustle. Jennie, this is an instance of embezzlement and there was a lot of embezzlement going on. So maybe when I put all this together, this is a scary story.
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Jennie: There you go.
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Paul: That’s exactly how this works. See, people this stuff works out. All right. This part of the scary story is one of the ways that this employee was embezzling from the practice was, you know, those really neat sonic toothbrushes. And this is a very successful practice. I just want to say multiple associates all in one location, big facility, a lot going on. Employees, a lot of employees, a lot of support that all played into this. You know what else played into this, Jennie, that’s scary? Trust. Trusting someone with everything and trusting that they wouldn’t do what they did. Because you care about them. They care about you. And you’re actually doing a lot of things for them. In this instance, as we were going through the litany of problems, I remember the doctor saying something to the effect of, no, I think it was his wife, because she had to step in to kind of help manage it. She said to me, Paul, we were going to write her into our will. She’s been with us for so long that we were going to write her. We are so upset right now. And I mean, she was almost in tears. And now, you know, we’re three weeks into the investigation.
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Jennie: This is like their most trusted long term person, which is typically the person they can, if there’s embezzlement, they’re the ones that can get away with it.
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Paul: Yeah. They’re the ones that get away with it. So in this case, those really nice toothbrushes and other things were being sold inside of the practice. By the way, I’ve seen this come up in a spa situation. So I’ve seen it come up a couple times in spa situation. And that one was pretty bad too because they were taking some products that were samples, but were still controlled substances that were supposed to be handed out by the doc, you know, trying to be handed out by the doctor’s samples. And they were taking those out and they were both giving them away to friends and family, but they were also ended up figuring out they could sell them, sell them. And so they were selling them too.
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Jennie: So I thought you were going to talk about the people who steal the vials of Botox.
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Paul: And there’s so, you know, here we go. So, you know, there’s all kinds of opportunities for leakage. But in this instance, the story I’m talking about is this person was they were selling the toothbrushes. So they, they nobody noticed that they were going through so many,
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Jennie: Um, so much inventory.
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Paul: So much inventory, they didn’t really notice. And I mean, what eventually gets everybody who embezzles is you get, they get too greedy and then they sell ten too many this month without anybody noticing. And so they’re like, I wonder if they would notice fifteen. And so it didn’t take long before they were able to discover it. And by the way, the selling of the toothbrushes is what undid this embezzler. I mean, from the HR point of view, I mean, inventory, you got to have checks and balances in place. They had done with this person because they trusted him. You know, I’ve always just said you’ve always heard it trust but verify.
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Jennie: Yeah. Because it’s, you know, they’re not the person who’s tracking the inventory is the person who’s stealing them and selling them on eBay. And then the person who’s tracking, you know, your P&L, the person who’s tracking how many Sonicare brushes you sold internally in the practice is the person who’s also selling them. So they’re able to kind of run the numbers. They’re just kind of if you’re not paying attention to it. And who is stealing products is not even the way that we typically see embezzlement. It’s, they’re doing stuff on your day sheets. You know, they’re, they’re taking money in other ways that you’re not seeing. And this person was doing that too, and quite a lot of it, but they also just saw an easy opportunity of no one’s paying attention to this box of toothbrushes.
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Paul: Let’s add another way. In this instance, that they had added family members to the payroll that weren’t working for them.
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Jennie: Yeah, that happens a surprising amount.
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Paul: It was a lot of money. It wasn’t just one. I said family members. It wasn’t just two. It was three. And like you said, I’ve seen this in a couple of other instances. This is another creative way of, you know, kind of stealing. And, you know, the scary part is, that the practice couldn’t even see that it was missing. I think that’s, I think that we all think as owners, I would miss that much money. But I can tell you right now, people who do this kind of thing, they do it slowly, they do it insidiously. They do it right from the beginning. It’s kind of that old adage, if I had written my first sick note, if I had signed my first sick note from my mom, the school would have never known what my mom’s signature looks like, and I could get away with it. It’s kind of that same sort of thing. But in this instance, this is pretty scary because it had gone on for many years. So, I mean, we’re talking, we’re talking, tens of thousands, hundreds of thousands of dollars over a period of time that went missing from this practice. That’s kind of scary. So, you know, the reason why this is scary is because I don’t know if you know it or not. Jennie, but this is actually a ghost employee. I think that’s what we do. It’s a ghost employee, the employee that doesn’t actually come to work but gets paid. Yeah, yeah. That’s called a ghost employee. So that fits into the spooky story.
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Paul: Jennie’s so deadpan sometimes, I can’t tell if she’s laughing inside or she’s laughing inside at me. Or if she’s laughing on the outside. I think it’s a little bit of everything.
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Jennie: It’s the lawyer-face.
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Paul: It’s the lawyer-face. I know it scares people. It doesn’t scare me. I’m not scared of you, Jennie. I’m a little bit. I’m a little bit scared of Jennie. All right. This next story I think is. This is a very old story. It’s a misclassification that triggers an investigation. So for our listeners, Jennie, what is a misclassification?
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Jennie: So typically there’s, there’s two types, but it basically means you’ve, you’ve classified someone wrong, an employee wrong, which means they are being paid wrong. They’re missing benefits and rights, all kinds of things. And this could be misclassifying them as exempt or non-exempt, which goes into salary, hourly, overtime. There’s rules about when you can do that and when you can’t, and they misclassified them as a contractor. That’s another way instead of an employee.

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Paul: Okay, so let’s just scare everybody right now. That’s not how I intended to do this. But if everybody in your practice is on salary and you pay them a fixed salary and you’re not tracking their time.
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Jennie: You’ve violated the law already.
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Paul: You violated the law by not tracking their time. And you have probably most likely misclassified ninety percent of your workforce. So if that’s the case, boo. I mean, I don’t know what else you should get in touch.
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Jennie: You should probably do something about that.
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Paul: Yeah. You should do some research on that. Okay. So in this case it’s a medical practice. I want to say it’s so long ago. I can’t remember if it was one of our specialty practices that we work with over at CEDR or if it was just a GP practice. I can’t.
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Jennie: I can’t tell you because this has happened more than once.
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Paul: Okay. So it comes across. Okay, so in this one though, I don’t know if you know it or not. And this is what makes this a very scary story, because usually we’ll just tell you, look, you can get audited. The employee can bring a complaint against you. In some states, this could actually be unlawful. You could get charged with a misdemeanor. You would have legal fees, you would have to pay penalties. We can say all of these things. But what we can also see and what made this one of the most scary stories was the letter sent from the Department of Labor, not just requesting time keeping records and records in general. They wanted the bank records. They wanted seven years worth of bank records. And at that time, I’m you know, I’d never heard of that. I didn’t know that DOL could come in and look at your bank records. And I was like, well, why in the world would they want bank records? What would they gain from that? And of course what they would
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Paul: They would be able to see if you’re misclassifying someone as a contractor, because sometimes contractors don’t show up, they just don’t show up in the normal course of things. Like if you’ve got someone misclassified as a contractor who’s supposed to be an employee, who may even be an employee who’s supposed to be paid by the hour, then they won’t even see that they’re not anywhere.
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Jennie: Yeah. Like, how are they going to find out? Which is also when we give all the warning, you could get audited, your employee can make a claim or the contractor could make a claim. And they’re all like, well, that’s not going to happen. Well, what will happen is they’re going to stop working for you, and they’re not even intending to get you into trouble. And they just file for unemployment. And that’s what happens a lot of the time.
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Paul: Or don’t pay their taxes.
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Jennie: Or they don’t pay their taxes

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Paul: Or they, um, just get a random audit. They get audited.
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Jennie: Yeah. The contractor does.
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Paul: And then they have to explain where their money was coming from. And that leads back down to you.
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Jennie: Or they go through a separation with their spouse, and now their records are being looked at because of child support and all kinds of things. And now some other totally unrelated attorney, entity, judge, is like huh? And it’s like, well, you know, she should be responsible for getting the kids health insurance because I don’t have it. Because I’m a contractor. And guess what? Your spouse is going to get you in trouble because she doesn’t want to pay for health insurance. And you’re not giving her health insurance because of her contract.
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Paul: Because they’re a contractor. Another piece of this story, actually, in the end, the thing that triggered this, I don’t remember what triggered it. Did I say I don’t think I remember.
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Jennie: Your initial story was the contractor in quotes stopped working at the practice and they didn’t have another job lined up right away. So they filed for unemployment.
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Paul: Okay. All right. Thanks.
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Jennie: Unemployment needs to see your records to show. Are you eligible? And they don’t have records showing they were paid as an employee. And so they just hand it off to the Department of Labor.
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Paul: And then, if I remember that actually the first time the contractor understood that they were supposed to be an employee, and they realized that they could get the employer kind of in trouble. And so they I think they may have reported it as well. This just keeps getting scary and scary. As I remember the details on this particular one. The part here that I wanted to relay is in the end, this could have cost a whole lot more, like it could, if I remember, it was like legal fees and everything all in. It was less than like thirty five thousand dollars, which by the way, for me, I don’t know about you. That’s a whole lot of money.
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Jennie: It is, but it’s kind of surprising that it’s that low.
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Paul: It’s not it’s not a you know, it’s not one hundred and fifty thousand or two hundred thousand where a lot of these cases go up. However, it took two years, two years for this thing to get settled out by the government and by between the government and this practice and the time that it took away was probably ten not maybe not three hundred thousand. It was a yeah, it was a huge distraction, loss of sleep, all these things. So the moral of this story is – know how to classify your employees. I mean, it’s just that simple. You can’t rely on your payroll company. They’re, that’s not their job. I mean, they might give you good guidance if you were to ask them. But if you think when you put something into the system, they have some kind of magic way of asking you if you’ve got this right or not, that is just explicitly not true. In most instances, in my experience, and you can’t rely on what the guy did before you, the guy or the gal did before you. A lot of these misclassifications things that cause these scary stories is. Jennie, what do they do? They follow what they know.
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Jennie: I know other people do it. They have always done this. The person wants to be a contractor.
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Paul: It’s how I was treated before. So I thought it was okay for me to treat.
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Jennie: Doesn’t mean it was right. And you know, it’s possible it was okay before. And laws change. But quite frankly, it probably wasn’t right before. And it can go well beyond taxes. Now the government wants their taxes, but the issue is also if someone’s a contractor, they’re not getting the benefits of employment. And that can include things like being able to be on your health plan. It can include getting paid time off if you offer that to your employees, or if your state requires that you offer paid sick days. And by the way, you may be thinking, well, the only person in my practice who’s a contractor is a doctor, and doctors don’t get paid sick days. Yes they do.
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Paul: It depends.
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Jennie: Most commonly, if your state, city or county has a mandatory paid leave law, it generally includes all employees. And sometimes you’ve got to basically pay them the same as if they had been working, which can be another reason why your associate, you know, independent contractor, suddenly realizes, hey, it would have been better if I was an employee because I was really sick and I could have been paid for that time. And there’s just a lot of things. And also, what if the associate doctor who’s a contractor, gets hurt at work? A true contractor is typically a third party company and they have their own insurance. Your associate doctor doesn’t probably does not have their own worker’s comp insurance.
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Paul: Which is an indicator that they’re more likely an employee. I mean, just as you weigh these things back and forth.
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Jennie: Yeah. So, there’s just this can come up in a lot of ways and there’s a lot more than taxes involved.
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Paul: Well, this is the heartburn episode of What the Hell Just Happened? This is not scary or spooky. It’s the heartburn. It’s just painful. The pain, the painful episodes. Jennie, I think that we’ve ruined enough people’s day.
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Jennie: It’s always the goal Paul.
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Paul: It’s always the goal. We’re HR. I think we’ve ruined enough people’s day. We’ve scared them. Um. Boo boo.
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