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Shands HealthCare to Pay $26M to Settle False Claims Allegations

 |  By John Commins  
   August 20, 2013

Federal prosecutors say improper Medicare billing at six Florida hospitals operated by Shands ran from 2003 through 2008. Shands makes no admission of liability, but will pay a total of approximately $26 million plus interest.

Shands HealthCare will pay $26 million to settle whistleblower allegations that six of its Florida hospitals knowingly billed the government for inpatient procedures that should have been outpatient services, federal prosecutors said Monday.

"The Department of Justice is committed to ensuring that Medicare funds are expended appropriately, based on the medical needs of patients rather than the desire of healthcare providers to maximize profits," Stuart F. Delery, assistant attorney general for the Department of Justice's Civil Division, said in prepared remarks. "Hospitals participating in Medicare must bill for their services accurately and honestly."

The six Florida hospitals were named as defendants in a whistleblower lawsuit brought under the False Claims Act. Prosecutors said an audit showed that the improper billing at the six hospitals ran from 2003 through 2008 and that Shands officials knowingly submitted the improper claims to Medicare, Medicaid, and TRICARE.

The six Florida hospitals are: Shands at Jacksonville; Shands at Gainesville, also known as Shands at the University of Florida; Shands Alachua General Hospital; Shands at Lakeshore; Shands Starke and Shands Live Oak. Specifics details of the billing scheme were not provided in a media release issued by prosecutors.

Shands issued a press release stating that it cooperated with the investigation and negotiated the settlement "to avoid long and costly litigation. While there has been no admission of liability, Shands HealthCare hospitals in Gainesville and Jacksonville will pay a total of approximately $26 million plus interest: $25.2 million to the United States under the Medicare program and $829,600 to the State of Florida under its Medicaid program."

The settlement results from a whistleblower lawsuit filed in 2008 in federal court in Jacksonville, FL, by Terry Myers, the president of a healthcare consulting firm, YPRO Corp. Shands said it had hired Myers as an independent consultant in 2006 and 2007 to conduct a routine audit of its billing practices. Myers' share of the settlement has yet to be determined, prosecutors said.

"The audit showed inconsistent billing processes in 2006 and 2007. Allegedly, for some patients, Shands may have billed Medicare and Medicaid for short overnight inpatient admissions rather than for less expensive outpatient or observation services. In each case of alleged overbillings, the patient received all services ordered," Shands said in a media release.

Timothy M. Goldfarb, CEO of Shands HealthCare in Gainesville, said in a media release that "the case in question does not involve the failure to provide high-quality patient care, but rather inconsistent billing processes. We proactively initiated an independent audit that identified some opportunities to improve billing processes at Shands. We took immediate steps to make improvements."

Goldfarb said Shands proactively conducts audits of its billing practices to remain current with the complex healthcare regulatory environment, which he said is subject to continued change in policy and guidelines. He said the health system encourages staff to identify and report potential issues and errors.

"As a responsible corporate citizen, our intent and practice has always been to comply with government regulations. We have conscientiously worked to create and operate an appropriate, fair and accurate billing system for all payers," Goldfarb said. "There was no intentional misconduct or callous disregard of these issues on our part."

Prosecutors, however, saw it differently.

"The public expects its medical professionals to operate with a high degree of integrity," A. Lee Bentley III, Acting U.S. Attorney for the Middle District of Florida, said in prepared remarks. "When healthcare providers seek higher profits at the expense of their professional judgment, the public trust in the medical system is compromised."

Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services said that "regardless of the complexity of these schemes to siphon off crucial healthcare dollars, our law enforcement officials will work tirelessly to seek justice."

DOJ said that since January 2009 it has recovered more than $14.8 billion through False Claims Act cases, with more than $10.8 billion of that amount recovered in cases involving fraud against federal healthcare programs.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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