Instructions
Read the Resolving Ethical Business Challenges on page 161 and answer the questions on page 161 using MS Word or a compatible word processing application. Upload your answers to the appropriate assignment folder. DO NOT send a PDF file.
The answer to each question must be a minimum of 50 words and must be in your own words. Plagiarism (ie. copying) from the web, the book, etc. will result in a grade of zero. See Rubric under Content, Course Content Section, Rubrics.
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Dr. Robert Smith owned his family practice for over 20 years. He came from a family of success. His father was a brain surgeon and his mother a well-known author. His younger brother, Saul, owned his own accounting firm for several years, but came to work with Dr. Smith after he sold it for a modest amount.
After graduating at the top of his class from Johns Hopkins University, Dr. Smith was awarded a cardio thoracic surgery fellowship in New York. He spent a few years there and was well on his way to fulfilling his dream of becoming a heart surgeon. During this time, however, his father became ill. Dr. Smith decided to return to his hometown of Zoar, Ohio, to take care of him. Under Dr. Smith’s care, his father started showing signs of improvement. He was glad not only for his father, but that he could go back and continue his pursuit of becoming a heart surgeon. On the day he was set to leave, his mother became ill and died a few days later from a rare form of cancer that showed no symptoms. The devastation hit the family hard. Saul was still in college, and Dr. Smith’s father needed someone to be with him at all times. Dr. Smith decided to stay in Zoar to take care of his father. He opened up a family practice in the town, thus putting his dream of becoming a heart surgeon on hold indefinitely.
Over the years, Dr. Smith sometimes felt regret that he never achieved his dream, but his job as the town doctor had been fulfilling. Now Saul was working with him, helping with the business. This made things significantly easier for Dr. Smith, who haphazardly kept his own books and patient files. One day, as Saul organized Dr. Smith’s piles of paperwork, he noticed there were charges to Medicaid that must be a mistake. While most of the population of Zoar, Ohio, was considered low-level income and qualified for Medicaid, this was not the case for all patients. There were several elderly middle- and higher-income families who regularly visited the office and usually paid with a check or cash. Saul assumed his brother’s administrative office skills were poor and aimed to fix it. However, as Saul organized the paperwork and checked files, these charges to Medicaid appeared to increase, dating back at least five years.
Saul approached his brother. “Robert, are you aware you charged Medicaid for Mr. and Mrs. Bennett’s visits?”
“Hmmm. Let me see the paperwork,” Dr. Smith asked. Saul handed it to him. Dr. Smith glanced at the document and said, “Yes, they are over age 65, so I made a bill for Medicaid.”
“But we have records they paid you with cash,” Saul replied. He handed Dr. Smith an old receipt. “And there are similar instances with some of your other patients. Besides, Medicaid is for low-income patients, not the elderly. Mr. and Mrs. Bennett are clearly not low-income.”
Looking a little bit flustered, Dr. Smith replied, “Saul, you know how I am with details. I’m no good at it. That’s why I hired you. Thanks for catching my mistake.” Dr. Smith walked back into his office and shut the door, leaving Saul standing in the hallway with a stack of files.
Saul knew what his brother gave up for their family and the good he did for the families in this small town, but he was convinced these charges were not accidental. There were too many of them and the amount of money charged exceeded $75,000.
“What happened to all that money?” Saul wondered. He also wondered how to handle the situation. He thought to himself, “How can I report this without sending Robert to jail? If I don’t report it and Medicaid finds out, I could go to jail and lose my accounting license. This is such a small town. If anybody finds out, we’ll never live it down.” At that moment, the phone rang, and Saul was the only one there to answer it.
Questions | Exercises
1. Describe Saul’s ethical dilemma.
2. Why would Medicare fraud be a white-collar crime?
3. How should Saul approach the situation?
