Dental Practice Fraud: You Cannot Eliminate It, But You Can Catch It Early

Spiro Leunes
Feb 7
4 min read

Updated: 4 days ago

I will say this clearly because practice owners need the truth, not theory. Dental practice fraud is not 100 percent preventable. What is preventable is the size of the loss and the length of time it goes undetected. Fraud can go on for many years without the dentist noticing and can amount to several hundred thousand dollars before it is caught.

Understanding the Nature of Dental Fraud

That is the core issue in almost every dental embezzlement case. It is rarely one giant event on day one. Instead, it is usually a series of smaller actions, hidden over months or even years, then discovered too late.

Fraud isn’t limited to cash embezzlement. Expensive dental supplies and instruments can be easily stolen and auctioned off on a website. Gold and silver fillings, if not safely guarded, can also be stolen and sold. From these examples, there are many ways to defraud a dental practice.

If you want to protect your practice, focus on early detection and properly safeguard supplies and small instruments. The practices that find fraud early are the ones that build systems, not just trust.

Why Dental Practices Are Exposed

Most dental offices run lean teams. While this is efficient, it creates risk when one person controls too many financial functions.

Common High-Risk Setup

One person receives payments.
That same person posts to the practice management software.
That same person also does the bookkeeping (I’ve seen dentists delegate bookkeeping to their office manager; this is a big mistake!).
That same person handles adjustments and refunds.
That same person helps reconcile accounts.
That same person deposits.

This is exactly how concealment happens. This is why segregation of duties in dental offices is not optional; it is foundational.

The Reality of Dental Fraud

Even with good people and a strong culture, fraud can still happen. Controls can be bypassed. Someone can override a process. Collusion can occur.

So, the goal is not perfection. The goal is to:

Reduce opportunity.
Increase visibility.
Detect abnormalities faster.
Contain damage quickly.
Store and lock away expensive supplies and instruments.

If your systems surface issues in 30 to 60 days instead of 12 months, your financial exposure is dramatically lower.

Red Flags Every Dentist Owner Should Watch

No single red flag proves fraud, but patterns matter. Watch for:

The employee who wants to know everything and control everything.
The employee who never wants cross-training.
The employee who resists anyone reviewing their work.
The employee who never takes vacation and never wants backup coverage.
The employee whose lifestyle appears inconsistent with known income.

Again, these are indicators, not accusations. The right response is to verify controls, review activity, and test the data.

Real-World Patterns from Dental Fraud Cases

Public enforcement matters because it shows how schemes actually happen in real practices. Across multiple dental fraud cases, the pattern repeats:

Too much authority concentrated in one role.
Weak reconciliation and limited owner review.
Manipulated refunds, write-offs, deposits, or billing activity.
Detection delayed until losses are significant.

Different states, different fact patterns, same operational weakness. When duties are not separated, and reviews are not independent, losses can scale quietly.

Segregation of Duties in Dental Offices: Practical Model

A smaller practice can still separate duties. You do not need a massive team; you need clean control points.

Minimum Duty Separation

At minimum, split these functions:

Payment intake (front desk or designated staff).
Ledger posting and adjustments (different person).
Deposit preparation (different person).
Bank reconciliation review (owner, partner, or outside controller).
Refund approval (owner-level approval above a threshold).

If staffing is tight, use compensating controls:

Owner review of daily deposit log versus PMS collections.
Weekly refund and adjustment review.
Monthly independent reconciliation by outside bookkeeping/CFO support.

This is how you implement segregation of duties in dental offices in the real world, even with a lean team.

Your Monthly Dental Fraud Control Checklist

Use this checklist every month, with no exceptions:

Review bank reconciliation summary for outstanding checks.
Review adjustments by user, reason code, and amount.
Review refund log and supporting documentation.
Review patient credit balances and aging.
Compare PMS collections to bank deposits and merchant batches.
Review deleted transactions, voids, and write-offs by employee.
Confirm role-based permissions are still appropriate.
Confirm at least one finance-facing process is cross-covered.
Require practice management software passwords to be changed every six months.

If you do this consistently, you will catch anomalies much earlier.

Mandatory Vacation: A Control, Not a Perk

In finance-sensitive roles, uninterrupted time off matters. Why? Because many schemes require continuous involvement to keep the records aligned and questions suppressed. When someone else runs the function during time away, hidden issues have a better chance of surfacing.

Mandatory vacation plus cross coverage is a simple, practical anti-fraud control for dental offices.

Build a Speak-Up Culture

Many fraud cases are discovered because someone noticed something and said something. Your team should have:

A clear reporting path.
Confidential options.
A no-retaliation policy.
Owner-level follow-through.

People report concerns when they believe leadership will act professionally and fairly.

Bottom Line for Dental Owners

You do not need fear-based management. You need system-based management.

Dental practice fraud is not fully preventable.
Dental embezzlement risk can be reduced.
Early detection is the real goal.
Segregation of duties is the anchor control.
Consistent monthly review is the difference maker.

The practices that survive fraud risk are not the ones that assume it cannot happen. They are the ones that make concealment difficult and detection fast.

Sources

https://www.acfe.com/about-the-acfe/newsroom-for-media/press-releases/press-release-detail?s=2024-report-to-the-nations https://www.acfe.com/fraud-magazine/all-issues/issue/article?s=top-internal-controls-that-reduce-fraud-losses-2024 https://www.ada.org/resources/practice/practice-management/responsibility-for-billing-records-and-accounting https://www.fdic.gov/news/financial-institution-letters/1995/fil9552.html https://www.occ.treas.gov/news-issuances/bulletins/2019/bulletin-2019-37.html https://www.justice.gov/usao-sdtx/pr/local-woman-sentenced-embezzling-funds-dental-office https://www.justice.gov/usao-az/pr/tucson-orthodontist-and-his-spouse-charged-engaging-scheme-embezzle-dental-practice https://oag.ca.gov/news/press-releases/attorney-general-bonta-secures-sentencing-southern-california-dentist-medi-cal https://www.justice.gov/usao-sdca/pr/imperial-county-dentist-sentenced-over-three-years-prison-and-nearly-85-million