My client was the junior partner doctor who had no say in the administration of the medical practice. The senior partner ran everything and didn’t show my client any reports. My client received a guaranteed salary and an incentive bonus. Somehow, no matter how many surgeries he performed, his bonus wasn’t right. He couldn’t figure it out.
My client called me in and we got more detailed monthly billing reports and reviewed them together. The senior partner had instructed the biller to post the payments for my client’s surgeries as she posted all the payments. Then she was to adjust off the payments on his surgeries for certain patients. They were the largest fees, of course. Then she was to use a special code which he had programmed into his proprietary software called the “clean up code.” Doing this effectively removed the payment from the books.
My client was not properly compensated because he was not credited with the payment and thus his bonus was reduced. It also was not reported as income, so the senior doctor did not pay taxes on the payment. This is clearly tax fraud. The daily report balanced because of the adjustment.
But the check did go into the bank and the senior physician pocketed the money.
Lesson: Beware of billing systems created by independent small companies that allow someone to manipulate the figures in unusual ways.