Shands HealthCare to pay $26 million over false claims

Shands HealthCare in Florida agreed to pay $26 million to resolve allegations that its hospitals billed government health programs for inpatient claims that should have been coded as less expensive outpatient services.

Healthcare consultant Terry Myers of YPRO Corp. triggered the government's investigation with a whistle-blower suit filed in 2008 under the False Claims Act. According to a news release the system issued on the matter, Shands hired Myers in 2006 and 2007 to audit its billing practices.

Based on Myers' lawsuit, the government alleged that six hospitals in the Jacksonville-based system knowingly submitted false claims from 2003 to 2008.

Shands HealthCare CEO Timothy Goldfarb, however, said in the release that “there was no intentional misconduct or callous disregard of these issues.” The settlement agreement (PDF) stipulates that Shands does not admit liability.

“We proactively initiated an independent audit that identified some opportunities to improve billing processes at Shands,” Goldfarb said. We took immediate steps to make improvements.”

Myers' share of the settlement payment had not been determined, according to the Justice Department release.

Shands HealthCare cooperated with the investigation and has made a number of changes to its processes and procedures, including a team-based approach to ensure accurate coding and making expert physician advisers available to help with coding, according to its release.

The lawsuit implicates UF Shands Hospital in Gainesville, Fla., and UF Health Jacksonville (Fla.), which are operated in partnership with the University of Florida Health Science Center—as well as Shands Alachua General Hospital in Gainesville, now run as part of UF Shands.

Health Management Association, an investor-owned hospital chain based in Naples, Fla., acquired majority interests in the other three in 2010: Shands Lake Shore, Shands Starke and Shands Live Oak regional medical centers.