Shands HealthCare to pay $26M for false inpatient claims

JACKSONVILLE, Fla. - The Justice Department says Florida's Shands Healthcare has agreed to pay $26 million to settle claims that six of its facilities submitted false claims to Medicare, Medicaid and other health care programs.

The six Shands facilities are: Shands at Jacksonville; Shands at Gainesville; Shands Alachua General Hospital; Shands at Lakeshore; Shands Starke; and Shands Live Oak.

The department announced Monday that the programs were billed for inpatient services that should have been billed as outpatient services from 2003 to 2008. The settlement arose in a lawsuit filed under the False Claims Act, which allows private citizens to sue on the government's behalf and receive part of any settlement or judgment.

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

The lawsuit was filed by Terry Myers, president of a health consulting firm. His share has not yet been determined.

"We hold ourselves accountable for the highest standards of care and service," said Timothy Goldfarb, CEO of Shands HealthCare in Gainesville. "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."

According to the department, from 2003 through 2008, the six hospitals knowingly submitted inpatient claims to Medicare, Medicaid and Tricare for certain services and procedures that Shands Healthcare knew were correctly billable only as outpatient services or procedures.

Shands said its officials fully cooperated with the state and federal investigation and negotiated the settlement agreement announced to avoid long and costly litigation, though it said there has been no admission of liability. Shands said it regularly and proactively conducts audits of its billing practices.

"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."

The six Florida hospitals were named as defendants in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens to sue on behalf of the government and receive a portion of the proceeds of any settlement or judgment awarded against a defendant. The lawsuit was filed in federal district court in Jacksonville by Terry Myers, the president of a healthcare consulting firm, YPRO Corp.

"Regardless of the complexity of these schemes to siphon off crucial health care dollars, our law enforcement officials will work tirelessly to seek justice," said Daniel Levinson, inspector general of the U.S. Department of Health and Human Services.

"This settlement illustrates the government's emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius," the Justice Department said a news release. "The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of 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 health care programs."

The settlement was the result of a coordinated effort among the U.S. Attorney's Office for the Middle District of Florida, the Commercial Litigation Branch of the Justice Department's Civil Division, the Department of Health and Human Services' Office of Inspector General and Office of Counsel to the Inspector General, and the Florida Attorney General's Office.

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