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July/August 2006

Practice Perfect: Compliance & Risk Management
Don’t Get Conned: How to Outwit the Swindlers
By Chris Mcdonagh, Associate Editor

How easy would it be for swindlers to cash in on you and your staff? By implementing the three lines of defense outlined below, you can make sure that your practice is a tough nut to crack.

Spot These 7 Scams

As a first line of defense, alert your staff to the most common types of scams.

#1. “We need to verify your address so we can deliver your order . . .” When you hear those words, alarm bells should start ringing, warned Walt Underwood, MBA, FACMPE. The “order” could involve a one-time purchase of, for instance, a HIPAA CD-ROM or a directory, but it more commonly involves supplies, such as rubber gloves, film, paper or toner. However, “it will turn out that the caller is not the vendor that you’ve been dealing with. In the case of the toner scam, if you give the address he will then ask you to verify the model number for your fax machine or printer. The third piece of information that he’ll ask for is your name. And a few days later, your practice will receive a shipment of ink cartridges using your name as the person who ‘verified the order,’” said Mr. Underwood, who manages the Thomas Eye Group, a practice with seven locations in and around Atlanta. Sometimes these callers will use a different approach—they will tell you that one of their representatives is on his way to service your copy machine, but he needs your exact address and the model number of your fax machine.

#2. “This is your last chance to buy before the prices increase . . .” These callers will intimate that they’re your regular vendor, and they’ll make it sound like they’re doing you a favor. They’ll tell you that the ink cartridges are about to go up in price and this is your last chance to buy them at the older, lower rate. If a caller tries to rush you into making a decision, that can often be a tip-off that the supposed bargain is really a rip-off.

#3. “Your subscription is about to run out . . .” Another common problem can occur with subscriptions, warned Carol Poindexter, JD, a partner in the National Health Law Practice Group of Shook, Hardy & Bacon LLP in Kansas City, Mo. “Suppose you receive a renewal notice for a particular publication. You’ve never ordered it in your life, but a member of staff thinks, ‘My goodness, our subscription is expiring,’ and 20 years from now you’ll still be receiving that same publication because staff will keep resubscribing.”

#4. The bogus invoice—when you get billed for goods that you didn’t request or receive. This scam works when businesses cut checks without confirming that an invoiced item was both ordered and delivered.

#5. Phone frauds—changes in service or provider. Look out for an unexpected increase in your phone bill. Your provider may be charging you for additional services that you never requested (a scam known as “cramming”). Or a new vendor may have taken over as your long-distance carrier or DSL provider (when done without your permission, this is known as “slamming”). See if your phone company has a bill-blocking option that stops other vendors from arranging to bill for services unless you have confirmed directly with your phone company that you want those services.

#6. Phone frauds—pay-per-call scams. If you are asked to make a phone call or send a fax, check that you recognize the area code. Otherwise you might be tricked into using an expensive pay-per-call service.

#7. Misleading product coupon and contest entry forms. Beware the small print. The coupon might save you money on a product, but it also might bring you more than you bargained for. By signing it, you may, for instance, have agreed to add expensive features to your phone service.

Tighten Your Phone Procedures

Many scams start with a phone call, which is why you should employ the following phone procedures as your second line of defense.

  • Make a certain member (or members) of staff responsible for all orders and order-related inquiries. “Establish strict policies regarding who can order or verify orders for supplies,” said Mr. Underwood. “Ask staff to forward all questionable inquiries regarding orders to that person.” All phone issues should similarly be channeled through one designated staff person.
  • Compile a list of regularly used vendors. This will help you to determine whether the person on the other end of the line is your regular vendor or just a pretender.
  • Verify the caller’s identity. When you’re not sure whether callers are from your regular supplier, take their details and call your regular vendor to verify their story. Similarly, if a caller asks you about your phone service, don’t give any information over the phone. Get the person’s details and then call your phone company.
  • Get it in writing. Never agree to anything over the phone. Insist that the offer be made in writing.
  • Check before you call an unfamiliar area code. To make sure that you’re not being duped into using an expensive toll number, call the operator or else go online (use the free “Area Code Look Up Service” that is provided in the “Directory Assistance” page at

Your Final Line of Defense

Your final line of defense involves the decisions to process the invoice and then sign a check.

  • Use strict purchasing controls. “Use a purchase order system, so you can detect deliveries that have no corresponding purchase order,” said Mr. Underwood. “And if you don’t have such a system in place, you should at least make sure that delivery notices are acknowledged by the person who had supposedly ordered the supplies.”
  • Check the invoice for these four red flags. 1) Make sure the invoice has a phone number. People who send out bogus invoices don’t want angry phone calls. 2) Be wary of any invoice that mentions “Yellow Pages.” This is not a copyrighted term so it is often used by scammers to give themselves a veneer of respectability. 3) Check the small print. It may look like an invoice at first glance, but it could turn out to be a solicitation for business that was craftily designed to give you the impression that you’re being billed for goods or services that you have already received. 4) Check the phone bill carefully. If you notice a steep jump in the charge, see if you have a new vendor or if services have been added.
  • Before you sign that check . . . Ms. Poindexter urges practices to have two people involved in payments to vendors —one who processes the invoice and another who signs the check. And that second person should look at the invoice before signing the check. “If the invoice is from a vendor that the check signer has never heard of, then he or she should ask who it is,” she said. Furthermore, this division of responsibilities “is essential for preventing embezzlement.”

If You Do Spot a Scam

“These scam-vendors are usually a nationwide enterprise and not easily tracked down,” warned Mr. Underwood. “They are probably not in your state. Since interstate commerce is involved, it may be worthwhile to notify the Federal Trade Commission [].” You can also contact the office of your state’s attorney general, your local police department or the U.S. Postal Inspection Service. (To find your local Postal Inspection Service, visit

And these scams tend to run in phases—so if they’re trying it with you, they are likely to try it with other medical practices. Members of the AAOE can send out a warning via e-talk (


Further Reading. For scam updates visit the Web sites of the Better Business Bureau ( or the National Fraud Information Center ( For tips on preventing employee embezzlement, read the January 2005 Practice Perfect (


AAO/APAO Joint Meeting
Las Vegas: November 11-14, 2006

Mr. Underwood will be an instructor for Strategic Planning for Practice Executives (Event code Spe43; Saturday, Nov. 11, from 9:30 a.m. to 3:30 p.m.), Large Practices Interactive Discussion (Spe19; Sunday, Nov. 12, from 4:15 to 5:30 p.m.), Hiring and Retaining A+ Employees (570; Monday, Nov. 13, from 3:15 to 5:30 p.m.) and If I Knew Then, What I Know Now: Pearls for the New Administrator (Spe22; Monday, Nov. 13, from 8:30 to 10 a.m.).

Ms. Poindexter will be an instructor for the 2006 Administrators’ Symposium on Health Care Fraud and Compliance (Event code 359; Sunday, Nov. 12, from 3:15 to 5:30 p.m.), Employment Law Boot Camp for Ophthalmology Practices (488; Monday, Nov. 13, from 10:15 a.m. to 12:30 p.m.), Don’t Be a Gambler When Dealing With Problem Employees (531; Monday, Nov. 13, from 2 to 3 p.m.) and Employee Embezzlement: When What You Don’t Know Can Hurt You (704; Tuesday, Nov. 14, from 10:15 to 11:15 a.m.). She will also moderate a discussion on problem employees during Brown Bag Roundtable Discussions (Spe36; Tuesday, Nov. 14, from 12:45 to 1:45 p.m.) and will be a moderator during three Breakfasts With the Experts.

For event descriptions, go online at, select “Online Program” and search by event code or presenter’s name.