How Should We Handle Salary Deductions After a Patient's Family Canceled Payment?

Dear Members,

It's me, Alumolu, working as a Manager in a hospital located in Andhra Pradesh. I would like to bring an issue to your notice for suggestions and guidance.

Patient Discharge Issue

Two patients, a male and a female (husband and wife), were admitted to our hospital and treated. The female patient recovered and was discharged, but the male patient was referred to a higher center. Their son came to the hospital and claimed that he spoke to our Managing Director (MD), who supposedly agreed to let them take the patient away. However, I denied this as I couldn't reach our MD for confirmation. I requested the son to make the payment, and he provided a cheque, which I sent to the Accountant.

On account of this issue, my MD intentionally switched off his mobile and informed only the Accountant that he would be available on his brother's mobile, instructing not to disclose this to anyone. Unfortunately, the patient went to another hospital and passed away there.

Legal and Financial Consequences

Later, the patient's son canceled the cheque and sent a false legal notice. We consulted an advocate who examined the situation and stated that we could claim the full amount because the son admitted, "I have to give XX amount to you."

The problem now is with my MD, who is deducting our management and supervisors' salaries until the amount is recovered. We tried to explain our advocate's advice to him, but he refused to pay us in full.

Dear sir/ma'am, please help us resolve this issue.

Dear Alumolu DP,

We, the members of this forum, are outsiders and do not know the internal dynamics of your company. However, the following observations or questions arise from your post:

a) It appears that the procedure for acceptance of cheques from patients or their kin has been finalized in your hospital. The realization of the cheque takes a few days. Under such circumstances, why did your hospital not create an SOP for cheque acceptance? For cheque payment, you could have taken an undertaking from the patient that if the cheque bounces or issues arise from non-realization, their liability towards payment of the hospital charges remains as it is.

b) Secondly, it appears that your hospital relies on verbal communication. If a patient says they have authorization from the MD to accept the cheque, you could have asked them to bring a written authorization. It was the patient’s duty to ensure you received a call from the MD. The telephonic discussion should have been followed by written authorization from him. The incident highlights the importance of written communication in routine administration.

c) Notwithstanding point (b) above, when you tried to contact your MD, his phone was not reachable. In such a case, why did nobody send him an email or a message through WhatsApp? A delay in obtaining the authorization could have frustrated the patient or their kin. Out of frustration, the patient might have spoken the truth.

d) When this incident was happening, your MD's phone was not reachable exactly at that time. Was it a deliberate attempt by the MD to remain incommunicado? Was your MD in collusion with the patient or their kin?

e) Since the patient escaped without paying the hospital charges, why did your hospital not approach a lawyer? Why did the concerned employees approach a lawyer in their personal capacity? This is an official matter, and it should have been dealt with by the company’s (hospital’s) administration.

f) Now, this is about the recovery of the dues against the patient admitted. 100% recovery from the erring employee(s) is wrong. There are a good number of judgments by the courts of different levels. In fact, before initiating the process of recovery, your hospital should have ordered a domestic inquiry. Did an independent and impartial inquiry take place?

Learning from the Incident for HR Professionals

The incident highlights the importance of organizational communication. Organizational communication means creating means so that the parties concerned are informed proactively or the transfer of information takes place in a standardized manner. If the patient or their kin had been communicated well in advance on the means of accepting the payment, this problem would not have arisen. The quintessence of management science lies in showing the power of anticipation and preventing dissatisfaction or even disputes. Lessons of management science are taught to develop an ability to prevent problems rather than waste time solving them!

Thanks,

Dinesh Divekar

Dear Alumolu,

The present issue is with you to recover the amount from the person who received treatment. You should file an FIR against the person (issued cheque) under section 420 for cheating and dishonesty, along with other criminal sections deemed appropriate. Another case should be filed against the patient for non-payment of hospital dues with interest for the recovery of dues.

The action of the MD is obviously to deduct the outstanding amount from the staff because the patient was discharged without the bill being paid, due to their fault. Though the action of your MD is justified, the action was too early as it could demoralize the staff. The MD should proactively support the staff in recovering the amount from the cheater. As per the posting, the actions of your MD and Accountant in this matter create suspicion.

The death of the patient does not validate non-payment of dues for their treatment.

Dear Colleague,

As rightly discussed by the other colleagues, challenges like non-payment, partial payment, denial to pay, cheque bounce, and cheque cancellation by parties who availed services but later canceled the cheque due to some grievance are common in the healthcare sector.

It seems that the organization needs to strengthen its internal billing, collection, and discharge procedures meticulously, with robust system controls, including good hospital billing software. The organization (hospital) should have a sound legal process in place to recover and deal with such cases, supported by a competent legal team. Unless there is serious negligence on the part of the employees or intentional violations of laid-down procedures, the organization should not proceed with recovering the amount from employees without a clear charge sheet and an inquiry to express the employees' side. Abrupt decisions leading to recovery from employees can cause panic and disrupt the smooth workflow, affecting the hospital's reputation and systems.

In this case, the hospital should proceed with legal action to collect the money from the concerned parties, allowing reasonable discounts if applicable to the family. This is a matter to be dealt with legally by the organization.

Deduction from employees should be the last resort when no recovery is possible, provided it is proved that there is a serious lapse in duties and procedures by the employees. All employees should meet the MD and jointly present their case to the management clearly. There are legal ways to contest, but it might affect the employment of those concerned, making their life in the organization difficult. Hence, it must be carefully discussed and resolved.

All the Best, God Bless, Dr. P. SIVAKUMAR

Doctor Siva Global HR Tamil Nadu

I think the deduction from salary is illegal under the Payment of Wages Act and various other legislation. The recovery can only be done in cases where there was fraud on the part of the employees or deliberate violation of the company's procedures. In the latter case, deductions can only be made after a court order.

Given the background, this was deliberately done by the MD, so you have limited internal escalation options. You need to consult with an advocate and file a criminal/civil case against the hospital and the MD. Please note that this can be an expensive process unless you have local NGOs, unions, etc., supporting you.

In the meantime, a better option is to start looking for another job.

Dear colleague,

In my view, the MD in this case is the root cause of the issues. If there was indeed a discussion between him and the patient's son as claimed, it was the duty of the MD to ensure that all concerned parties were informed. By not acting proactively, the MD's irresponsible behavior has triggered a chain of actions and reactions from the staff, resulting in monetary losses. The monetary loss suffered by the hospital should be recovered from the MD's salary and not from the staff.

Before taking punitive action of deductions from staff salaries, they should have been given an opportunity to explain, which is an unacceptable lapse.

The concerned Manager also erred by not confirming with the MD about the alleged discussion before discharging the patient. Additionally, the patient should not have been discharged before the cheque was realized.

Largely, the MD and partly some staff have messed up this matter. However, the action of deducting staff salaries, in the manner it is done, is unjustified and illegal.

Staff should escalate this matter through suitable verbal or written representation. Suitable legal action deserves to be taken against the truant son of the patient for cheque cancellation.

Regards,

Vinayak Nagarkar
HR and Employee Relations Consultant

The above discussions overlook the relevance of the provisions of the Negotiable Instruments Act in the given context. It is not understood how the patient's son had 'cancelled' the cheque. It may be that he instructed the bank to stop payment. Still, the accountant should have presented the cheque, and if the cheque was not honored, the management could have initiated criminal action under the provisions of Section 138 of the NI Act.

Obviously, the fault lies with the accounting system being followed by the hospital.