Theft and Embezzlement in the Healthcare Industry
Theft and embezzlement both mean taking property without the legal owner’s consent. The biggest difference between the two is that embezzlement took place when the defendant had permission to control, use, or handle the property. The misappropriation of the property by that person is embezzlement. With theft though, the defendant had no such authority, while stealing.
As both actions are illegal under both state and federal laws, if you feel as though you have become the victim of a theft or embezzlement scheme, contact your local police department to report the crime. Then contact an attorney to ensure that your interests are protected.
If you have been charged with, or are under investigation for, theft or embezzlement contact an experienced attorney today. An attorney will be able to ensure that you receive the best result possible in your individual case.
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Theft and Embezzlement under the Law
Federal Law – Theft or Embezzlement in connection with Health Care (18 U.S.C. § 669)
Under federal law, it is illegal to steal or embezzle, among other things, any money or property that belongs to a health care benefit program. Or in simpler terms, you cannot take any money or property that belongs to an insurance company, whether government controlled or not.
An example of federal healthcare theft or embezzlement would be if an office administrator receives a check from an insurance provider. The administrator, knowing that the check had already been written off, pockets it for themselves rather than putting it into the officer funds.
Since the check was from an insurance provider, the crime would be tried under federal law.
Further, the example above shows an act of embezzlement. The administrator had the authority to receive checks on behalf of the medical office and had the authority to control the funds to a certain extent. Since she was, at some point, validly in control of the funds, the act is embezzlement rather than theft.
New York State Law
Theft and embezzlement are made illegal under New York Penal Law, Article 155 – Larceny.
The New York larceny statute, specifically 155.05, loops conduct that was formerly considered embezzlement into the actions that are to be considered larceny.
The larceny statute breaks the crime down into degrees, depending on the severity of the crime. The degrees of the crimes are dependent on the value of the property stolen and are discussed in more detail below.
- Petit Larceny is the theft of any property.
- There is no minimum value necessary.
- Petit larceny is a class “A” misdemeanor.
- Grand larceny in the fourth degree, in terms of health care, is the theft of any property that exceeds $1,000 in value.
- Grand larceny is a class “E” felony.
- Grand larceny in the third degree, in terms of health care, is the theft of any property that exceeds $3,000 in value.
- Grand larceny is a class “D” felony.
- Grand larceny in the second degree is the theft of any property that exceeds $50,000 in value.
- Grand larceny is a class “C” felony.
- Grand larceny in the first degree is the theft of any property that exceeds $1 million in value.
- Grand larceny is a class “B” felony.
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Theft and Embezzlement in the Healthcare Industry in Action
Theft and embezzlement are crimes that are rampant and happening everywhere. They occur more often in the healthcare industry than they do in most other industries. The two crimes amount to, according to the Association of Certified Fraud Examiners, about $25 billion in annual losses for medical practices.
Embezzlement and theft schemes can take place in several different manners. This includes fraudulently cashing checks meant to go into the medical practice, forging signatures on accounts in order to have payouts directly deposited into them, or creating fake employees in order to receive those salaries.
Below are a few real-life examples of the different ways health care employees have committed theft and embezzlement.
In October 2018, a former employee of a healthcare non-profit in South Carolina was convicted of embezzling nearly $420,000 from the company. The center receives funding by the Health Resources Service Administration, a department under the United States Department of Health and Human Services.
The employee, who was the human resource supervisor, created fake employees and paid out a salary to those fake employees. In reality, those salaries were just going back to the defendant.
The defendant received a 30 month (about 2 ½ years) prison sentence and was further ordered to pay back all of the money she embezzled.
In North Carolina, the finance director of High Point Regional Hospital was arrested in January 2018 for the alleged embezzlement of close to $3 million.
The former director allegedly used her position in the finance department to write fraudulent checks from various practice groups which she would then deposit into accounts she controlled. She also opened credit cards in the name of the practice groups and used the cards for her own personal gain.
The scheme took place over the course of 14 years.
Potential Punishments for Theft and Embezzlement
If you have been charged with, and are ultimately convicted of federal theft or embezzlement, you could face several different punishments.
- If the amount embezzled is over $100, you could face up to 10 years in prison.
- If the amount embezzled is under $100, the maximum amount of time in prison you could be sentenced to is lessened to up to 1 year.
- You may also receive a fine. Under federal law, you could be fined $250,000 as an individual or $500,000 as an organization.
- The judge may also decide to fine you up to double the amount you gained from the embezzlement or theft scheme.
- If you are charged with, and ultimately convicted of, petit larceny (a class “A” misdemeanor) you could face up to 1 year in prison or a maximum of 3 years probation. In addition, you may be fined up to $1,000 or double any gain from the crime – whichever amount is greater.
- If you are charged with, and ultimately convicted of, grand larceny in the fourth degree (a class “E” felony), you could face up to 4 years in prison. You may also face a fine in excess of $5,000.
- If you are charged with, and ultimately convicted of, grand larceny in the third degree (a class “D” felony), you could face a prison sentence of up to 7 years or a period of probation.
- If you are charged with, and ultimately convicted of, grand larceny in the second degree (a class “C” felony) you could face a prison sentence of up to 15 years or a period of probation.
- If you are charged with, and ultimately convicted of, grand larceny in the third degree (a class “B” felony) you could face a prison sentence of up to 25 years.
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Other consequences of a criminal conviction
In addition to a possible prison sentence and criminal fines, you may also face civil lawsuits and penalties for your involvement in an embezzlement of theft scheme.
If you are convicted of a felony, there are also incidental consequences that come with the conviction.
These consequences include, but are not limited to:
- The inability to vote in elections and serve on juries;
- The loss of any professional license;
- The inability to apply for, and receive, government aid;
- The inability to receive a permit for a firearm;
- The potential loss of future employment opportunities due to background check requirements;
- Delay in getting or denial of future applications for state licenses;
- Loss of driver’s license ;
- Prohibition from running for or holding public office; and
- Ineligibility to enlist in the armed services.
Enforcement and Investigations
Since the crimes span both state and federal jurisdictions, there are quite a few agencies who may be tasked with investigating claims of theft or embezzlement. Often these agencies will work in conjunction with one another in order to streamline investigations.
The agencies include, but are not limited to:
- Local Police Departments;
- New York State Police;
- New York Office of the Attorney General;
- Federal Bureau of Investigation (FBI);
- United States Department of Justice (DOJ);
- United States Department of Health and Human Services (HHS); and/ or
- Medicare/Medicaid Strike Force.
Investigations begin in any number of ways. A member of another medical offices staff alert authorities of a possible crime. Insurance companies perform audits into medical billing offices if should suspicious practices seem apparent. Criminal charges, depending on jurisdiction, are brought by either a state level District Attorney, or by a federal level United States attorney.
If you have been charged with, or are under investigation for, theft or embezzlement contact an experienced, knowledgeable attorney as soon as possible. Not hiring an attorney is not worth the risk of making incriminating statements or violating the confidentiality of the patients of your practice.
How Can You Defend your Medical Practice from Theft and Embezzlement
There are several general steps that you can take in order to protect your practice from theft and embezzlement:
- Never have just one person in charge of your billing and finance departments. Having at least one set of extra eyes on the money that goes through your medical practice may prevent an employee from stealing any of the funds.
- If not typically in charge of looking at your books and finances, it is time to start. Looking over the finances of your medical practice means that you do not have to rely on others to ensure that your money is not being stolen from you.
- Make sure that your finances and books are organized and up-to-date. If there is ever a question about your business practices or a possibility that funds are being stolen have your books up to date will make it easier, and quicker, to solve the problem at hand.
For a more individualized plan, contact our attorneys who can look over your business practices and make a suggestion based on what you already have in place. They have the knowledge of medical billing and coding and business practices that are necessary to create the best possible plan to protect your practice from the potential loss of hundreds of thousands of dollars.
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What Should I do if I am charged with Theft or Embezzlement
First and foremost, contact an attorney. An attorney will be able to guide and advise you at every step of an investigation and through charges, if it comes to that. An attorney will also protect your rights and interests throughout the whole process.
If you have been served a search warrant, comply with the agents who are searching your home or office. Do not answer any of their questions; you do not want to make further incriminating statements or grant them access to search for something that was not included in the original warrant.
If you have been brought in for questioning, or are being questioned by any agency, remember that you have a right to counsel. Do not answer any questions until your counsel arrives so you do not accidentally implicate yourself in any criminal activity.
Contact a Healthcare Attorney You Can Trust
Facing a charge of theft or embezzlement can be scary, our attorneys are here to take away any fears during investigations and criminal charges.
Our attorneys are well-respected, experienced litigators with knowledge in all federal and state level judicial practices and procedures.
Our attorneys have represented both public companies and private individuals and will work to protect you, your family’s, and your business’ interests.