An Insurance Check “Ponzi Scheme”

One of my clients recently had a change in staff and discovered that their insurance coordinator was embezzling money.

This was a very unusual situation and I wanted to share the story with you.  Many of you have seen the Chase Bank commercial showing how easy it is to deposit a check into your account.  However, we didn’t realize that Chase would accept ANY check and deposit into ANY account.

The employee was taking several insurance checks stamped with the doctor’s signature stamp. She handled the 60-day past-due insurance follow up. Before the stolen checks showed up on the DAYSHEET report she would substitute someone else’s checks and the original EOB for the stolen check as well as manipulate the totals so the day sheet would always balance. Since the practice did a lot of the same procedures it was relatively easy to get a substitute check that equaled the stolen check.

To prevent this from happening:

Assign one person to open the mail and give the checks to the insurance coordinator. At the end of the day, the EOBs must be balanced against the deposit slip (showing that the names match). Cross-train the front staff.  Randomly and periodically rotate positions. Divide responsibilities.  Examples: Use a two-person close; Check writing/depositing/reconciliation. Review and authorize adjustments. Daily, not only do EOB’s need to match the deposit, but also checks received must match EOB’s.  Example:  a $300 Metropolitan EOB should have an associated $300 Met check; it should not be a $300 check from Principal. Destroy any signature stamps. Endorse payments immediately. Check references before hiring new employees. Perform a credit bureau and/or employee background check. Bond employees.