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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.
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6-7cResolving Ethical Business Challengeshttps://ng.cengage.com/static/nbapps/glossary/images/footstar.png
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?
Sample
Resolving Ethical Business Challenges
Chapter 6-7c Assignment
1.
Saul faces a deeply personal and professionally serious ethical dilemma: he has discovered what appears to be intentional Medicaid fraud committed by his own brother, Dr. Robert Smith, totaling more than $75,000 over at least five years. On one hand, Saul has a legal and professional obligation as an accountant to report financial fraud, and staying silent could put him at risk of losing his accounting license and potentially facing criminal charges himself if the fraud is discovered by authorities. On the other hand, reporting his brother could result in Robert facing criminal prosecution, devastating their family relationship and ruining Robert’s reputation in the small, close-knit community of Zoar, Ohio. The situation is made even more emotionally complex by the fact that Robert sacrificed his dream of becoming a heart surgeon to stay home and care for their family. Saul must weigh his duty to the law and to his profession against his loyalty to his brother and the potential consequences for everyone involved.
2.
Medicare and Medicaid fraud is classified as a white-collar crime because it is a nonviolent, financially motivated offense committed by a person in a position of professional trust and authority. Dr. Smith, as a licensed physician, held a trusted role within both the healthcare system and the government-funded insurance program. White-collar crimes are typically carried out through deception, misrepresentation, or breach of trust rather than physical force, and that is precisely what occurred here. Dr. Smith allegedly billed Medicaid for patients who were not eligible for the program and who had already paid for their services out of pocket, effectively collecting payment twice. This type of fraud costs taxpayers and the government billions of dollars annually and is taken very seriously by federal authorities. The fact that it was conducted systematically over several years demonstrates deliberate intent rather than a simple error, which further qualifies it as criminal conduct falling under the white-collar crime category.
3.
Saul should approach this situation by first having a direct and honest private conversation with his brother, giving Robert the opportunity to acknowledge the fraud and take responsibility for his actions. During this conversation, Saul should make clear that he cannot be complicit in covering up illegal activity, both for ethical reasons and to protect his own professional standing and freedom. Saul should strongly encourage Robert to voluntarily come forward to the appropriate government agency, such as the Office of Inspector General, and to repay the fraudulently obtained funds. Voluntary disclosure often results in reduced penalties and demonstrates good faith, which could help protect Robert from the harshest legal consequences. If Robert refuses to cooperate or self-report, Saul must seriously consider reporting the fraud himself to remain within the bounds of the law. Consulting with a lawyer before taking any action would be a wise step for both brothers, as legal counsel can help them navigate the reporting process while minimising potential damages to their personal and professional lives.
