Shands Hospitals Pay $26 Million in Florida Whistleblower Case

The Department of Justice announced today that Shands Hospitals will pay $26 million to settle charges of over-billing to Medicaid/Medicare for inpatient care.  The whistleblower case was filed under the federal False Claims Act and the Florida False Claims Act.  It was unsealed today upon announcement of the settlement.

Attorney Chris Casper of the James Hoyer Law Firm served as co-counsel, along with lead attorney Marlan Wilbanks, for whistleblower Terry Myers.  Meyers is the president of a healthcare consulting firm called YPRO Corp, which conducted financial audits for Shands.

According to the Complaint, in 2006 and 2007, Shands hired Mr. Myers and his company to audit six of its hospitals to determine if Medicare and Medicaid rules were being followed. They were specifically hired to see if Shands’ patients met the necessary requirements set by Medicare and Medicaid before being billed for inpatient services at six different Shands hospitals– Shands Alachua General Hospital, Shands Jacksonville Medical Center, Shands at the University of Florida, Shands at Lakeshore, Shands at Live Oak and Shands at Stark Hospitals.

Serious billing, coding and compliance issues were uncovered by the whistleblower’s company. The overall YPRO results showed that a significant percentage of all of the Medicare and Medicaid patient records audited should not have been admitted to the hospital as inpatients. Hospitalizations are much more expensive to the Government than outpatient services. Accordingly, Shands had a financial incentive to increase hospital admissions because they can charge higher rates than they can charge for outpatient treatments.

Despite recommendations by YPRO to Shands for the hospital to self-report the findings to the government, Shands did not disclose the findings of the audits and continued many of the practices that Mr. Myers believed to be fraudulent and illegal.  That lack of action ultimately led the whistleblower to file suit on behalf of the government, under the False Claims Act, to recover taxpayer money he believed was fraudulently obtained by the company.

The $26 million represents only a partial settlement of the charges in the Complaint. The Government has not yet completed its investigation of Mr. Myer’s allegations regarding outpatient claims.  Litigation regarding those charges will continue.

As allowed under the False Claims Act, Mr. Meyers will be awarded a portion of the settlement for successfully bringing the case to light.