CEOs & Other Healthcare Executive See Easy Money In Hospital System

In this age of public scrutiny about financial wrongdoings and at a time when Occupy Wall Street sends a strong message to corporations about greed there is a segment of the financial sector that still manages to break the rules day after day, healthcare.  In a day and age when a piece of newsworthy material can make it from Beijing, China to Los Angeles, CA in a viral second the headlines are full of hospital executives, accountants, CFOs and physicians stealing.  We call it embezzlement because it sounds nice as it rolls of the tongue but it is stealing no matter which way you roll it. 

Consider the case of Paul Cardwell, the former CEO of Powell Valley Healthcare in Powell, WY who is accused of embezzling nearly$850,000 from the organization¹. Cardwell authorized the spending of $847,934 for recruiting physicians, monies which were found to have been funneled to a straw company owned by Cardwell’s friends and then transferred to Cardwell by way of electronic transfer.  Cardwell is currently believed to be living in Thailand even though he has no ties to that country.

Consider the case of Carol Maultsby the former VP of Corporate Risk Management for Novant Health in North Carolina².  Ms. Maultsby plead guilty to eight state counts of embezzlement, admitting to stealing $620,000 from Novant.  Maultsby had set up a dummy company and authorized 50 checks of amounts between $12,000 and $13,000 apiece over seven years to be deposited into a back account under the dummy company’s name.

Consider the case of Richard Crabtree, Senior VP, COO for Christus St. Vincent Regional Medical Center who billed and collected $3.2M for claimed services that were never provided or grossly overestimated³.  The Great American Insurance Co. filed the lawsuit last month against former hospital executive Crabtree, Loretta Mares, her two brothers and five of their companies, according to the Associated Press. The lawsuit, which calls the fraud "a pervasive scheme," alleges that Crabtree and the other defendants engaged in the plot to misappropriate money from the start of his employment in 2002 until his termination in 2008. Although St. Vincent officials didn't comment on Crabtree's departure in 2008, the executive's termination coincided with St. Vincent's merger with the Christus healthcare group.

Further consider the case of Susan J. Morrison a former accountant for Michigan’s Munson Healthcare who in September plead guilty to charges of wire fraud and money laundering that totaled $1.1 million⁴. She transferred the money from Munson's Regional Healthcare Foundation's bank account to her former business, Great Lakes Bear Factory, between October 2007 and April 2011. She also made up false receipt accounts to cover up the theft.

If you think physicians are immune then consider the case of University of Louisville medical school physicians inappropriately used $4.8 million in Medicaid state funds for their own personal bonuses, diverting money away from indigent care⁵. Even more, the physicians used another $5.2 million for electronic records that would earn additional bonuses, according to the article.  Known as the repeat of the "Passport scandal," the accusations against University of Louisville physicians are similar to claims that nonprofit Medicaid managed care organization, Passport, transferred $30 million in funds to University of Louisville, University Physicians Associates, and other board members, according to the article. The groups repaid most of the funds to settle allegations by the Attorney General, who established the Passport transfer was illegal.

Lastly, consider the case of Marlene Rice Hoyle, 45, who was charged with embezzling $1.2 million from Jones Family Practice, where she worked for nearly 20 years, most recently as office manager⁶.  Hoyle, who pleaded guilty to five felonies on June 6, has been sentenced to four to five years in prison, according to the superior court clerk's office, with at least five years supervised probation following her release. Judge James J. Morgan also ordered Hoyle to pay more than $1 million in restitution, $100,000 of which she has already paid voluntarily.

The lure of money is a powerful thing when people face foreclosure, medical bills, dependant parents and trying to live a more “comfortable” life.  The occurrence of such theft marks us all and reminds us that those of us who work in healthcare are keepers of truth and decency within our organizations.  The crimes committed her are shocking not only because they violate the public trust but also because they are brazen and because they are only about money. 

Sources:

1.  Ilene Olsen.  “Former Hospital CEO Accused of Embezzlement.”  Powell Tribune [Powell, Wyoming] September 29, 2011.

2.  Michael Hewlett.  “Former Novant Executive Pleads Guilty To Embezzling Nearly $620,000.”  Winston-Salem Journal [Winston Salem, NC] February 21, 2012.

3.  Phaedra Haywood.  “Insurance Firm’s Lawsuit Alleges $3.2 Million Embezzled at Hospital.  Santa Fe NewMexican [Santa Fe, NM] December 29, 2011/

4.  James Russell.  “Munson Embezzler Gets Prison.”  Traverse City Eagle [Traverse City, MI] December 8, 2011.

5.  Deborah Yetter.  “Medicaid funds allegedly misused: U of L doctors used $4.8 million in Medicaid money for bonuses.” Courier Journal [Louisville, KY] September 29, 2011.

6.  Rebecca Clark.  ‘Woman Pleads Guilty to Embezzling $1 Million From Doctor’s Office:  DA Says She Has Nothing To Show For It.”  Shelby Star [Cleveland County, NC] June 7, 2011.