Reprinted
from REPORT ON MEDICARE COMPLIANCE, the nation's
leading source of news and strategic information on Medicare compliance, Stark
and other big-dollar issues of concern to health care compliance officers.
By Nina
Youngstrom, Managing Editor
March 30, 2015
Volume 24 Issue 12
An
anonymous letter sent to the compliance officer at Memorial Hermann, a health
system in Houston, led to the arrest of a manager in an alleged $9 million,
14-year embezzlement scheme. The case underscores the value of ensuring that
employees know how to contact the compliance officer and use the hotline.
Kenneth
Joseph Wild II, 49, was accused of mail fraud and wire fraud in connection with
the submission of phony vendor invoices, the U.S. Attorney’s Office for the
Southern District of Texas said on March 23. Wild began working for Memorial
Hermann, the largest nonprofit health system in the state, in 1996, and four
years later became manager of printing and mail services in its printing
services division, according to an affidavit submitted by a U.S. postal
inspector to support the criminal complaint. The printing services division
outsources the health system’s informational and promotional materials.
Two
weeks after Wild took the management job, an entity called “Digital Designs
Limited” started submitting invoices to the health system for printing and data
conversion services, the affidavit alleges. The invoices often were approved by
Wild and payments were mailed to a P.O. box in Houston. Digital Designs sent
200 invoices to Memorial Hermann, and the health system forked over more than
$9 million to the entity.
Eventually,
the walls came tumbling down. On March 11, 2015, a handwritten, anonymous
letter was received by Memorial Hermann’s chief audit and compliance officer,
the affidavit alleges. It said: “Please investigate the check payable to
Digital Designs. I heard it is an anomalous, ghost account. Sincerely, Mr.
Concern.” In response, the health system did a “preliminary review and could
not find any evidence of work requested from Digital Designs by [the health
system] nor locate any work product purportedly provided by Digital Designs,”
the affidavit alleges. Two days later, the U.S. attorney’s office and U.S.
Postal Inspector Matthew S. Boyden met with hospital officials and launched an
investigation.
Letter
to CCO Helps End Scam
The
government alleges that Wild opened the P.O. box used by Digital Designs and
that payments made to Digital Designs were deposited into a bank account
assigned to Wild. He spent the alleged ill-gotten gains on “extensive
international travel, luxury items and general personal living expenditures,”
the affidavit states. It also turned out that Wild used to be a lawyer who
served time in jail after a conviction for felony theft and fiduciary
misappropriation of client funds in Harris County, Texas, according to the
affidavit. During an interview with the U.S. postal inspector, Wild admitted to
preparing phony vendor invoices in the name of Digital Designs, submitting them
for payment, approving them for payment, using the P.O. box to get the money
and using the “fraudulently obtained” hospital money to finance “a lavish
lifestyle,” the affidavit alleges.
Embezzlement
is a familiar problem in the health care industry and compliance training is a
good opportunity to talk about it, says Minneapolis attorney David Glaser, who
is with Fredrikson & Byron. “People may say it belongs in accounting, not
compliance, but often embezzlement comes to light by someone using the
compliance process for anything that can hurt the company, for anything that
can get you on TV,” he says. When training employees about the hotline, Glaser
recommends encouraging its use for anything that rings alarm bells, including
sexual harassment and dumping toxic waste. Otherwise, employees won’t know
where to go with their suspicions and may not act on them. “View your hotline
broadly as a risk management tool to control almost any risk the organization
might face,” Glaser says. “Make it a one-stop shop for employees to express
concerns.”
The
name of the compliance officer and hotline number should be kept in front of
employees so they know where to report concerns, says Thomas Herrmann, senior
vice president of Strategic Management in Alexandria, Va. Apparently that was
the case at Memorial Hermann, because the compliance officer got the tip on
March 11 and fewer than 10 days later, the U.S. attorney’s office filed
criminal charges, he said. “They obviously had an effective communications
process,” Herrmann said. “The complaint didn’t sit in an inbox for 10 days.”
Hospitals
use all sorts of methods to remind employees of the compliance officer’s name
and hotline number and the policy against retaliation for reporting wrongdoing,
Herrmann says. Some hospitals place the hotline number and non-retaliation
message on the reverse side of employee badges; others have it on their
Internet and Intranet sites, he says. The compliance officer’s name, the
hotline number and compliance tip of the day are on the screensaver at some
hospitals.
“You
can have all the policies and procedures, but if people don’t know how to
follow them, it’s useless,” he notes.
Read
the press release at http://tinyurl.com/nubns6t.
