November 15, 2018
3 min read

What is the best practice for dealing with an employee who is caught embezzling from a medical practice?

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Not a straightforward solution

Kenneth A. Beckman, MD, FACS
Kenneth A. Beckman

Dealing with an employee who is caught embezzling from a practice is not as straightforward as it may seem. Each case is unique and needs to be treated on a case-by-case basis. It is always best to discuss this with the practice attorney before any action is taken. For some smaller actions, such as stealing from petty cash or taking supplies, it seems fairly simple to terminate the employment. Often, the employee may have a long history with the practice and may not have had any other issues previously. It is certainly not unreasonable, depending on the relationship, to allow the employee to make reparations or take some sort of penalty, but remain on the job under probation. The problem with this strategy is that it sets a precedent for future employees. It may put the practice at risk for future wrongful termination or discrimination issues if a later employee is terminated for the same act. Therefore, termination is most common in these circumstances.

Where this becomes more difficult is when the amount stolen is much greater. Some practices may have had upward of $100,000 stolen over the years. Termination alone does not seem to satisfy the needs of the practice. Obviously, attempts to recover the money should be made, but this is not easy. Then, there is the decision of pressing charges. For crimes of this degree, this seems to be logical. Unfortunately, the practice may then have a difficult time recovering any of the money. Even if it does recover some of the money, it may take years. Practices, therefore, may consider settling with the employee. This will give the opportunity for the practice to recover more of the money more quickly and potentially save the employee jail time. Of course, this creates an ethical dilemma. Typically with these settlements, a nondisclosure agreement will need to be signed. The employee may then apply for employment with another practice, and the current practice may not be able to warn the new practice of the potential risk.

In summary, employee embezzlement is a growing problem with no obvious solution. The events are typically addressed on a case-by-case basis. The practice needs to determine if its personal recovery of funds outweighs the risk of allowing the employee to continue to act in this manner in future jobs.

Kenneth A. Beckman, MD, FACS, is an OSN Cornea/External Disease Board Member. Disclosure: Beckman reports no relevant financial disclosures.



A personal crime

John B. Pinto
John B. Pinto
Corinne Z. Wohl, MHSA, COE
Corinne Z. Wohl

Of all the contemporary assaults on an ophthalmologist’s practice (regulatory burdens and scrutiny, competitive encroachment, rising costs, tighter labor markets, etc), none is more personal than when an inside member of a surgeon’s practice embezzles cash or inventory. Ophthalmologists are generally trustworthy people, and those who are themselves trustworthy are often too trusting of others.

Most practices fail to put adequate systems in place to curtail theft, including routine audits, deep background checks, bonding, inventory controls, CCTV cameras and routinely breaking up tasks so that individuals cannot act alone to divert practice resources. Ophthalmologists are often also too kind or frankly embarrassed when a theft is detected. They would rather cover up the diversion and not prosecute the offender. This results in three harms to the practice and society at large.

First, by covering up theft instead of discussing openly with relevant staff and advisers, the practice remains vulnerable to the next thief. Second, by allowing the offender to get off free of punishment, he or she will likely go on to do harm in a colleague’s practice across town. And third — and often overlooked — by not prosecuting an embezzler out of sympathy, you actually rob the offender of an opportunity to be put on a more honest life path.

When embezzlement is discovered in your practice, confer with your attorney, accountant, consultants and other professional advisers to decide on the best response. And besides tightening controls to prevent a recurrence, take seriously the greater good served to refer the matter to the police.

John B. Pinto is OSN Practice Management Section Editor. Corinne Z. Wohl, MHSA, COE, is an OSN Practice Management Board Member. Disclosures: Pinto and Wohl report no relevant financial disclosures.