Chapter 8: Honesty and Conflicts of Interest

CASE 8.1 Nepotism

Brenda established her private practice 20 years ago, and it has prospered because of the quality of services offered. Her role as a treating therapist has been reduced to half-time so that she can manage the business side of the practice. She has three full-time physical therapists (PTs), two physical therapy assistants (PTAs), two aides, a receptionist, and an office manager. Her sister's son, Patrick, just graduated with his degree in physical therapy. At her sister's urging, Brenda hires Patrick, although she is aware that she needs to avoid the appearance of favoritism, which would erode the morale of the other therapists who have been with her for many years. He is an excellent therapist, in need of the mentoring and guidance typical of new graduates but diligent and a quick learner.

When the receptionist takes an extended leave of absence to help her ailing father, Patrick recommends his (pregnant) girlfriend Kelly as a temporary replacement. Kelly, too, is well received by the patients and staff. She assumes new duties, such as filling charts and transferring the individual billing sheets for Medicare to the practice summary submitted for payment. Brenda is so pleased with Kelly's work that she wrestles with the possibility of hiring her permanently. Then Brenda receives notice from Medicare that some charges are not acceptable. Brenda calls the staff together and urges them to be more careful on their charge sheets and to review Medicare standards for billing. Patrick, worried that as the new therapist he had made the errors, compares his billing sheets with those forwarded to Medicare. There are discrepancies. That night he asks Kelly if she knows how some of the charges had been changed, and she readily admits she had changed them. She did so to help the clinic produce more money, hoping this would generate pay raises or bonuses for the dedicated staff. An argument ensues, and Kelly threatens to leave Patrick if any mention of the billing changes is made to Brenda.

The next morning Patrick talks with Brenda and claims that he made the errors and assures her it will not happen again. Brenda is surprised but encouraged that Patrick stepped forward even before she and the office manager had found out what happened. Later that day, however, Brenda calls Patrick into her office. Her office manager had already started a review of the financial records and found that, in addition to the Medicare problem, there was a discrepancy in the “cash pay” patient and product revenue. Although the cash pays were difficult to track, the debit and credit swipes were greater than the posted prices. The overall revenue was greater than it should have been. The office manager also told her that Patrick's billing slips had been correct and transferred incorrectly to the ...