How we are paying for an overpayment mistake made by Intermountain HealthCare

This post is about our experience with Intermountain HealthCare and how we encountered the issue of them overpaying my wife.


My wife, Wendy, is a physician for Intermountain HealthCare (IHC) here in Utah. IHC is the largest healthcare provider here in Utah. They are a nonprofit healthcare system. They own more than twenty hospitals, multiple clinics, and employ over 800 physicians across the state of Utah [source]. Simply put, they are a large organization.

In December of 2011, right before Christmas, Wendy got a phone call from her boss wanting to know why Wendy had been getting overpaid and not said anything about it yet. Wendy, needless to say, was surprised to hear that she was getting overpaid. So she started investigating and found that just as her boss had said, she had been getting overpaid. Here is the kicker though. This overpayment had been going on for two years, and no one in payroll had caught it. I would have imagined that any company would do at least yearly (if not more often) audits to make sure that their money is going where it’s supposed to.

money changing handsOrdinarily, it can be fairly easy to see that a paycheck is wrong. Most of the jobs I’ve had were salary or hourly, and I can easily see that something is wrong. Being married to physician has opened up a whole new world to me of how someone gets paid for their work. Now just in case you aren’t aware, I have a BS in Engineering. This means I’m no stranger to math. Wendy and I sat down with one of the payroll dept people for IHC and after a lot of time and me working with a spreadsheet, I was finally able to understand how Wendy’s compensation is supposed to work. I will try to explain it below.

Wendy works at different clinics around town known as Kidscare. It’s after hours urgent care for kids. Her work value is calculated with a unit known as a relative value unit (RVU). This means that if she sees a kid with strep throat, IHC has determined that that visit is worth so many RVUs, which would be less than say a kid that needs stitches. Her contract with IHC says that they will pay her a certain amount for each RVU that she performs. There are monthly reports generated that tell her how many RVU’s she made each month. We just have to trust that the number crunchers some where are totaling these numbers correctly as she doesn’t really have the means to keep up with how many RVUs she collected each night at work. We can look up these reports, and find out how much money Wendy is owed by multiplying the number of RUVs for that month by her rate that she is paid. These reports are of course a month or so behind so it takes some effort to match it up with her bi-weekly paychecks. But in addition to her RVU rate, she gets a minimum hourly rate if she doesn’t reach a certain threshold of RVU’s for a night’s work. We don’t know which nights those are that she is getting her minimum plus whatever RVU’s she collected that night. There are also two methods for getting paid that physicians can choose between which are monthly compensation and what is known as the six month average.

The six month average method works like this. There are 26 pay periods in the year. IHC will take the number of RVU’s you made for your previous six months, multiply it by your RVU pay rate, and divide it by thirteen (the number of pay periods for the next half of the year). This gives you what you will see for each paycheck for that half of the year. The downside to this is that it compensates you for your RVU’s six months after you earn them. So when Wendy picks up extra shifts, she doesn’t see an increase in pay until the next six months. The plus side is that it makes budgeting for us easier because we know how much Wendy will be making for half of the year.

Now for the monthly compensation method. In UT, the law states that employers must pay their employees at least bi-weekly. Since her RVU reports only come out once a month, IHC has a system set up to help with that. Each month they get two paychecks except for June and December where they get three. The first paycheck of each month is given as an advance, and it is the same amount each time. When the last paycheck of the month comes in, the RVU total is paid for the previous month. For example in February, you get January’s RVUs. Also on that last paycheck, they are supposed to deduct the advance they gave you on the previous paycheck for that month. This makes for a monthly fluctuation in her income, and makes budgeting much more difficult. So much so that I chose not to budget the first two years we were married.

So here is where we encountered the problem. Her paycheck was too difficult for me to track at the time, so Wendy and I just trusted that IHC was doing it right. They are after all a big organization that is supposed to know what they are doing.

Well, while Wendy was getting the monthly compensation method for her pay, for two years they were not taking the advance back each month like they were supposed to. As I said, its a complicated paycheck and we just trusted them, so we didn’t bother to check. I personally didn’t know how her pay was set up so I just didn’t bother to ask.

We got married in the last half of 2009. When this mistake in pay started was in January of 2010. We were still learning how to live off her salary at the time so, it was still during an adjustment period. Wendy noticed that her anual totals were higher, but she explained it from a few ways. One, 2010 was when the H1N1 outbreak happened. She saw a lot more patients which means that naturally her pay would go up. She got more training from her company on charting, so she was able to chart in a way that got her more money. She also changed her deductions because she went from being single to married. She was also picking up extra shifts.

Well, we were grateful for what she was getting paid. We were also being smart about it by not spending money that we didn’t have. The house we bought when we got married was well within what she was getting paid before the mistakes in her pay began. The bank told us we were qualified for 3 times the loan that we took out. We bought things to improve our home, but only when we had the money to pay for it. We  bought new energy efficient windows for our home to replace the old single pane windows that were leaking terribly.We also put money into our IRA’s each year and bought some other investments. We paid off my car loan, and were putting extra on the principle to our home loan each month. We gave money to our church as well. We also went on vacations because we could afford it. We were keeping an eye on our finances to make sure we were in the black. Wendy and I had never lived in the same town before we got married, so we were just enjoying being a married couple, but we were being responsible about it. In November of 2011, we bought Wendy a new car because her old car was getting to be unsafe to drive. Then just a couple of weeks after we took out a loan on Wendy’s car, we find out that the income level we had planned for was getting cut.

Initially, we were both very angry about this as IHC wanted us to pay them back. After a couple of days of thinking and praying about it, we both decided that paying IHC back was the right thing to do. It wasn’t our money. Wendy had agreed to be paid so much money for so much work, and the right thing to do was to honor the agreement.

We met with a couple of lawyers and accountants about our situation. Mostly, we wanted to find out what our rights were, and if there was any precedent for this. Everyone we talked to couldn’t believe what had happened. Needless to say, there is no precedent for overpaying an employee for two years. Most of the time this is a month or two that goes by before a mistake is found. One of the lawyers told us that she had taken on a case for a firefighter here in Utah that had been overpaid for a long period of time.  He refused to pay it back and won the case in court. He lost his job though. It was argued that the correct compensation was set by his employer because it had become a regular amount over such a long length of time. It was also argued that his pay was difficult to calculate, so he couldn’t be expected to check it himself. Wendy loves her job, so we didn’t want to her to lose it by going to court. Besides, like I said, we felt it was the right thing to do by paying it back.

We met with a member of middle management at IHC a few different times to try and solve this problem. IHC was being ruthless about this whole ordeal. First they wanted to blame Wendy on it because she didn’t notice it. Never mind that they weren’t able to answer all my questions about how her paycheck works during that meeting. If they couldn’t understand her paycheck, I don’t know how they could expect us to be keeping track of it. IHC did not want to take, nor did they take, any of the responsibility for making the mistake of paying her incorrectly. It seemed to me that they have double standards for their employees. Let me give you an example. Say one of the employees from payroll comes to Wendy’s clinic with a sick child. Wendy prescribes a medication and sends them home. What if Wendy were to make a mistake and give the wrong dose for the prescription for the medication? I doubt the parent would go home and check the Internet to see what the correct dosing is for that medication.  Similarly, it shouldn’t be expected that Wendy goes home and recheck’s IHC’s payroll people to make sure they are doing their job correctly. I want to know how it is that IHC is able to bare no responsibility for this mistake. So now, because of their incompetence (and I can think of no other word but incompetence seeing as how a huge organization managed to go two years without noticing that they were paying someone way too much) we are the ones who have to bare the burden of their mistake by taking on hardships in our life.

I went back over all of our transactions for the past year and categorized them all. We use credit cards for most of our transactions and very little cash, so I was able to find most of what we had spent using (I wrote in an earlier post how we use credit cards.) From there I broke out a spreadsheet and made monthly averages for the categorizes that we spent money in regularly. I found a free spreadsheet template for budgeting and used it to come up with what we needed each month to get by on.

The worst part of this was that their lawyers put stipulations on how long they were going to allow us to pay back the amount. Not to get into specifics, but the amount we owed was six figures. They wanted this paid back in 4 years. Imagine paying for a small home in 4 years, that’s why banks have 15 and 30 year mortgages. This meant that our income was not only going to be changing by the amount that was being paid mistakenly, but also this new “debt” that we were having to pay for. The 4 years they wanted us to agree to was unconscionable. It would put us in the red each month and we’d wind up losing our home. This was with us cutting out everything to just bare minimums. The most disturbing part of this is that IHC didn’t seem to care. They just wanted their money back. We had hoped they would be willing to agree to a longer term plan where it wouldn’t put a burden on our finances, but their lawyers told us that we had to pay it back more quickly because they didn’t want to look like they were showing an employee favoritism by giving them an interest free loan. A loan that we didn’t ask for might I remind you.

We told them early on that we were willing to pay them back for the mistake that they made (which they never admitted to), but we only asked from them that they give us a reasonable amount of time to do this. It seemed that lost in this was the gratitude on their part that we were being way nicer than most people would have been by being agreeable with paying back the money. We went back and forth with IHC for a few months over getting this settled. They drug their feet in getting back with us when we’d make counter proposals usually because of mistakes we found in the contracts they sent us. They at one point were willing to give us more time, but they were going to charge us 6% interest on the money ,and classify it as a loan. There was absolutely no way were were going to agree to pay interest.

Another problem we had with the negotiations (and I use that term loosely as it was more of us catering to their demands) was their total lack of our big picture. The first contract they sent us said that there was no flexibility in the date for when the final payment was due. I brought up the scenario of what if Wendy was in an accident and was no longer able to work or was unable to work for a long period of time. Or when we decide to have kids, she was going to need to be on maternity leave. According to the wording in that contract, those times when Wendy wouldn’t be able to work, we would be getting a bill from them. Hmm, they hadn’t thought about that. Really? For some big shot business executives and lawyers getting paid way more than I ever will, they were out smarted by someone who didn’t finish MBA school because he didn’t keep his grades up.

Another oversight in one of the later contracts they gave us stated that Wendy was only allowed to have one extended absence during the payback period. That is essence was telling us that we would only ever be allowed to have one child. We told them that was unacceptable. The worst part of this is that they are making us pay back the gross amount including what  had been paid by them to the government for income taxes. That money never touched our wallet, but we were now responsible for it.

It felt to us that Wendy as an employee (a board certified pediatrician) was not being valued. She was literally a number, and that was as far as they saw her. I’m sure that patients who have healthcare debts similar to what we now owed were given much more lenient payment schedules than what they were expecting from us. That tells me that they are more willing to help out outsiders than to take care of their own. From their vision statement from their website it states

We value our employees as our most important resource and will create a workplace that attracts and rewards caring and talented individuals.

That is a flat out lie. From the way we were treated, there is nothing about that vision statement that has an ounce of truth to it. If anything, the way their unrealistic demands were coming at us, it made us feel as if they were trying to get rid of Wendy.

Let me list their “values” as quoted from the same site:

  • Mutual respect: We treat others the way we want to be treated.
  • Accountability: We accept responsibility for our actions, attitudes, and mistakes.
  • Trust: We act with integrity and can count on each other.
  • Excellence: We do our best at all times and look for ways to improve.

Charles W. Sorenson, CEO of Intermountain HealthCare, should be ashamed of the way he is running this organization. These vision statements and values that companies love to put on glossy brochures, websites, and use as talking points in company presentations certainly did not seem to apply to the real world from where we were standing. The funny part is that these “values” were hanging up on the wall in big pictures behind the member of management in our meetings where we were getting this resolved. I would look at the pictures, look a the guy, and then just wonder how many cereal box tops he had to save up for in order to send off for his MBA.

IHC touts itself as being a leader of providing low cost health care. They have even been highlighted in the national spotlight for this. President Barrak Obama, [sarcasm] my favorite president ever [/sarcasm], even mentioned them in one of his debate speeches recognizing them for their efforts to reduce healthcare costs. Hey, I think that’s great. I am all for us finding ways to reduce healthcare costs. Hey IHC, let me give you a tip on how to do more healthcare cost reductions. Get a new payroll staff, and then make sure they are paying their doctors correctly.

During our research into this fiasco Wendy heard that there were other doctors who worked for IHC that also had been overpaid for extended periods of time. I don’t know what is more disturbing that it was overlooked that employees were getting over paid for extended periods of time, or that this happened to more than one doctor. It’s clear to me, and should be to any outside observer hearing about this, that IHC suffers from a lack of competence in running the business side of their organization. The fact that there has never been a single dime spent on advertising for the clinics Wendy works at is another head scratcher. Then there is the issue that Wendy, as a board certified pediatrician providing medical care as a pediatrician, doesn’t get the same pay (less) as the other  primary care pediatricians who work for IHC. But those discussions don’t belong here any more than to mention them as examples of how inept this company is at the business side of things.

In the end, we settled on a payment plan that wasn’t as long as we wanted (5 years), but was livable. We’ve had to make lifestyle changes, but we are grateful that we can keep our home, have plenty of food, and not have to dip into our savings to get by each month. We have adjusted well, but it would be nice not to have this cloud of debt hanging over out heads. We are essentially having to make two mortgage payements each month. One for our home, and one to pay back IHC. We believe that God is doing this for a reason, one that we aren’t completely aware of now, but in the end we believe that He will be glorified through it. We also hope that somehow in this mess that us being willing to do the right thing will serve as a witness to someone. I know that someday when I explain this to my daughter, I’ll be able to do it with a clear conscious, and hopefully it will instill integrity in her when she understands what happend.

Why am I writing this? Well, for one Wendy says it helps me get out my frustrations. Will anyone read it? Probably not outside of my wife and my mom. But, if someone else reads this, I hope what they get out of it is to check your paycheck. Don’t trust the payroll people because only you have your best interest at heart. It’s no fun having to pay back a lot of money that you didn’t know you were borrowing.

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