Check Fraud in Medical Practices

Check fraud is a growing problem in our business environment. Technology-savvy individuals can produce realistic counterfeit checks easily. All it takes is the right office banking account information and access to computers and other devises.

Put controls in place to protect your practice from bank fraud – both externally and internally. Although it is impossible to completely eliminate any chance that a problem will occur, you can lower the risk that your practice will become a victim of check fraud.

External Controls

Your staff can provide an effective means to help control the risk of fraudulent patient payments. Alerting staff to the problem and enlisting their assistance is essential to success.

Establish procedures with your employees on the handling of payments received by check:

  • When payment is made in person, write down the person’s driver’s license or ID and obtain a full address and phone number.
  • Before depositing a check, make a copy of the front and back for reference.
  • If a patient’s check is returned, do not take another check from the individual.
  • Deposit checks on a daily basis – patients may fraudulently use their checking accounts to pay for services, only to then “stop payment” on the check.

Educate your employees on how to recognize fraudulent checks:

  • A check on poor quality paper, bank information typed or handwritten instead of printed, irregular signatures and dollar amounts and words that do not match are some of the signs of a potential problem
  • A patients that appears nervous, hurried or is overly talkative or polite may signal a potential problem

Internal Controls

Workplace theft costs jobs, affects increases in pay and available profit. No one wants to believe that a trusted employee is guilty of theft. You can minimize the opportunity for theft in the workplace by following some simple procedures.

  • Secure all supplies of checks, deposit slips and banking documents in a locked and safe place.
  • Avoid leaving a blank check for office use. If you must do so, leave it with only one employee.
  • Limit employees who are authorized to write checks and make sure that one person does not have access to the entire check writing process.
  • Advise your banking institution immediately if there are any changes in check signing authorizations.
  • Store canceled checks, bank statements and old deposit slips in a secure area, preferably off-site.
  • New checks and deposit slips should be ordered by the physician and number sequences should be verified on receipt.
  • If you determine that a check has been stolen, immediately notify your bank, stop payment on the check and attempt to get a police report filed. You may need to close the existing bank account and open a new one.

Keep in mind that controls will help to minimize potential problems but it is impossible to design controls that will completely eliminate all chance of occurrence. Any control can be overridden, particularly if several employees are working together to do so. However, by being proactive, you can reduce the risk that such misuse will occur.

This article was originally published in Illuminations: Facts & Figures from people with a brighter way, a Rea & Associates enewsletter, 10/10/2012.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.