Resolving Ethical Business Challenges

After graduating at the top of his class, Dr. Roberto Hernández 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. Hernández decided to return to his hometown to take
care of him. Under Dr. Hernández’s care, his father started showing
signs of improvement. On the day he was set to return to work, his
mother became unexpectedly ill and died a few days later. The
devastation hit the family hard. Dr. Hernández’s sister Alicia was still
in college, and his father needed someone to be with him at all times.

Dr. Hernández decided to stay in his hometown 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.

Dr. Hernández owned his family practice for more than 20 years. His
younger sister, Alicia, owned her own accounting firm for several years
but came to work with Dr. Hernández recently after she sold the firm
for a modest amount. Over the years, Dr. Hernández sometimes felt
regret that he never achieved his dream of becoming a surgeon, but his
job as the town doctor had been fulfilling.

Now Alicia was working with him, helping with the business. This
made things significantly easier for him. One day, as Alicia organized
Dr. Hernández’s documents and patient management system, she
noticed all his patients were on Medicaid. While most of the population

of the town qualified for Medicaid, this was not the case for all patients.
She knew of a number of families who regularly visited the office and
usually paid with check or with credit card that were not on Medicaid.
Alicia assumed her brother’s administrative office skills were poor and
aimed to fix it. However, as Alicia organized the paperwork and
checked files, the overall charges to Medicaid appeared to increase,
dating back at least five years.

Alicia approached her brother. “Roberto, are you aware you charged
Medicaid for Mr. and Mrs. Bennett’s visits?”
“Hmmm. Let me see the documentation,” Dr. Hernández asked. Alicia
handed the tablet to him. He glanced at the figures and said, “Yes, they
are over age 65, so I billed Medicaid.” “But we have records they paid
you with cash,” Alicia replied. She tapped on the screen to show the
receipts. “And there are similar instances with some of your other
patients. Besides, Medicaid is for patients with limited income, not the
elderly. Mr. and Mrs. Bennett, as you know, are not low-income
patients.” Looking a little flustered, Dr. Hernández replied, “Alicia, you
know how I am with details. I’m no good at it. That’s why I hired you.
Thanks for catching my mistakes.” With that, he walked back into his
office and shut the door, leaving Alicia standing in the hallway with a
stack of files. Alicia knew what her brother gave up for their family and
the good he did for the families in this small town, but she was
convinced these charges were not accidental. There were too many of
them, and the amount of money charged exceeded $75,000 per year as
well as the problem with Medicaid. “What happened to all that
money?” Alicia wondered. She also wondered how to handle the
situation. She thought to herself, “How can I report this without sending
my brother 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.

Questions :

1. Describe Alicia’s ethical dilemma.

2. Why would Medicare fraud be a white-collar crime?

3. How should Alicia approach the situation?