04/10/2025    Name Witheld 1

Fraudulent Misrepresentation in Sale of a Practice (Name Withheld)

I was extraordinarily stupid when I purchased my
practice. The seller convinced me that a
professional assessment was unnecessary and rather
than see this as a red flag, I believed him. His
representation was that the office equipment was
relatively new and everything was above board.
Once purchased, I did my own deep dig and found
the following:

· All of the office equipment was obsolete,
including the copier in the front which, when
opened, it died a few weeks after I bought the
practice had over 1 million copies on it.

· A locked door, for which no key appeared to be
available, was opened by a locksmith. On the
shelves were approximately 20 pair of diabetic
shoes and a massive, cardboard box. In the box
were about 100 Plastizote DM shoe inserts with
people’s names upon them. When asked, the office
assistant I inherited stated that “the first
inserts go to the patient with the shoes and 3
months later, they return and buy another pair.
They are kept in this box.” The shoes on the shelf
were ordered and (as I discovered) reimbursed by
CMS, but the patient didn’t like them and returned
them. No reimbursement to CMS was found during our
audit, which revealed:

· When someone appeared for an office visit and
was unaware of their deductible and how much of it
had been met, the charge was made and if a refund
was necessary, the “office policy” was that a
refund was not made unless the insurance company
or the patient requested it. The former owner
considered this “free money.”

· We did an accounting of every refund amount of
the “free money” cache. I decided that anything
over a dollar would be documented to make it
reasonable. Otherwise, the number of refunds would
go into the thousands of accounts. In total,
$28,000 was owed. I started sending checks out
over the next several weeks, even though those
monies were owed by the previous doctor and not I.

· Seeing that commonality of fraud, I also did an
audit of the billing practices and saw some
interesting things. The previous doctor’s biller
actually admitted that common practices included
billing for “a couple of hammertoes—which weren’t
done—when billing for a bunionectomy, because the
insurance doesn’t pay enough.” A comparison of the
operative note and the 1500 form submitted that it
was rare that this individual didn’t bill for
things which weren’t done in order to pad the
bill.

I could go on and on and on, but I learned two
things with this experience: 1. Trust, but verify
and; 2. Remember #1, before you step into #2
(excuse the pun.)

Have the practice assessed. If the seller gives
you flack, move on. Look at the financials. If
part of the practice sale includes receivables,
you will inherit the fraud involved. Don’t be
afraid to walk away.

Name Withheld 1

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