Identity theft of employee dentists by employers: a growing problem

As more dentists choose to spend some of their career employed by a corporation or as independent contractors, a new problem has followed—theft and abuse of doctor identity. This isn't identity theft in the usual sense, but more like misappropriation of a doctor's DEA number, and more. Read on ...

There has been a changing paradigm in recent years of doctors’ relationships to their practices. In the traditional model of years past, doctors were either independent solo practitioners or partners in a small group practice. More of today’s dentists are becoming employees of large practices and corporations.

There are also more independent contractor dentists. (Under IRS guidelines, most “independent contractor” doctors are actually “employees.” The misrepresentation often serves as a Federal Insurance Contributions Act [FICA] tax dodge for dishonest employers.(1) Some dentists are misrepresented as owners or partners, but are lawfully defined as employees under their service agreement contracts. This might affect junior colleagues and recent grads, as well as senior doctors who have sold their practices.

Doctor identity theft is unlawful and might manifest itself in a number of ways. State and federal authorities are increasingly aware of this criminal activity. Indictments and prosecutions can and do frequently ensue. It’s imperative, whatever the age and experiences of a practitioner, that they are fully aware of this potential for theft and abuse of their identity.

Misappropriation of DEA registration numbers
Most dentists are generally aware of potential theft of federal Drug Enforcement Agency (DEA) numbers from patients or staff. Prescription pads may be stolen. The doctor’s DEA registration number may be misappropriated. This is usually done in order to unlawfully procure Schedule II narcotics for sales and distribution, or for personal drug abuse. There are a number of steps to help prevent this that are beyond the scope of this article.

Doctors are probably less aware when their employer misappropriates their DEA number.(2) In a group practice with many employee dentists, any number of them may lack appropriate DEA registration to get patients needed prescriptions. Some doctors may have a suspended or revoked DEA license. Others are recent graduates awaiting authorization with DEA credentialing. Still others simply do not want to pay the steep DEA licensure fee. The employer may take an unlawful shortcut and assign a patient’s prescription to a different doctor who has a valid DEA registration. Without monitoring assistance from a state pharmacy board or the federal DEA, few employee doctors would ever catch this misrepresentation and abuse of their licensure.

Misrepresentations on insurance or Medicaid claims
Some employers will assign a credentialed employee dentist’s name and licensing to the care and insurance filing of dental services that they never provided. (3,4) Perhaps the care was generated by a non-credentialed doctor or non-doctor and assigned a validly credentialed employee doctor. Perhaps care was never provided at all, and was fraudulently assigned by the employer to a validly credentialed employee doctor.

The employee dentist might be fully unaware of these deceptions.(5) Other times the employee dentist may be complicit in misrepresentations on insurance or Medicaid claim forms.(6,7) The employer is in breach of statutes whether the doctor (whose identity was stolen) is aware or not. Doctor who actively allow their identities to be misappropriated may also be subject to civil and criminal penalties.

Misrepresentations in clinic ownership
Most states do not permit non-dentist ownership of dental practices. Most non-dentist owners of dental practices, whether lawfully owned or not, want a liability shield from the actions of their employee doctors. Yet the beneficial corporate owners desire full control and ownership of their assets (the dental practices), as expressed through control of clinic bank accounts, ability to buy and sell dental clinics, production quotas and bonuses, and power to terminate employee doctors who might be deemed “unproductive.”

The beneficial owner(s) will usually retain a figurehead dentist owner to serve as a nominee owner. This mechanism of employee dentist identity theft is nearly always done with the full cooperation and knowledge of the employee doctor. In one example, the nominee dentist purchased dental practices for the sum of $5.00 per practice (three practices in total), served as a sham-owner, and practiced dentistry several hundred miles away.

To date, the nominee owner dentist has received a state dental board disciplinary action over this issue.(8) By contrast, the corporate beneficial clinic owners have faced no state actions so far on this particular case. We can clearly see that doctor identity theft can potentially place greater risk on the doctor versus the true owner and true thief.

Recommendations to avoid employee dentist identity theft
1. If you as an employee doctor become aware of identity theft by your employer, you must act. Lack of action may imply your complicity in unlawful activities to authorities.
2. In many situations, such as knowledge of misappropriation of your dental license, DEA license, or Medicaid or insurance credentialing, you are required under state and federal statutes to report any violations to appropriate authorities.
3. If you are employed by an employer whose business models are outside the rule of law, don’t walk away, run! If you’re bound by contractual obligations to give notice (often three months) prior to termination, retain good legal counsel. Most states will void any employment contract that places an employee in breach of civil or criminal statutes.

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References
1. http://www.irs.gov/Businesses/Small-Businesses-%26-Self-Employed/Independent-Contractor-Self-Employed-or-Employee
2. www.justice.gov/usao/ilc/press/2008/04April/0411.html
3. http://www.fbi.gov/washingtondc/press-releases/2015/dental-practice-owner-charged-with-health-care-fraud-and-identity-theft
4. http://www.fbi.gov/washingtondc/press-releases/2012/oakton-dentist-convicted-of-illegally-distributing-narcotics-health-care-fraud-and-id-theft
5. http://www.wjla.com/articles/2015/05/owner-of-d-c-dental-practice-hit-with-federal-fraud-id-theft-charges-113917.html
6. http://www.fbi.gov/newhaven/press-releases/2015/dentist-involved-in-medicaid-fraud-scheme-pleads-guilty
7. http://www.in.gov/activecalendar/EventList.aspx?view=EventDetails&eventidn=165718&information_id=198738&type=&syndicate=syndicate
8. http://www.op.nysed.gov/opd/oct12.htm#knot