Shands Hospital pays $26 million in fraud settlement case

Shands Hospitals has agreed to pay $26 million to settle a lawsuit that claims it admitted patients who didn’t need to be hospitalized at six of its Florida hospitals, attorneys announced Monday.

The lawsuit, which stems from a whistle-blower claim filed in 2008, alleges that the unnecessary admissions resulted in overbilling Medicare and Medicaid.

“We uncovered a severe lack of management oversight and a systemic failure to follow Medicare and Medicaid regulations,” said whistle-blower Terry Myers in a statement. He was hired by Shands as an independent consultant in 2006 and 2007 to audit the health system’s billing practices.

While making clear that the settlement represents “no admission of liability,” Shands officials confirmed the institution would pay $25.2 million to the United States under the Medicare program and $829,600 to the State of Florida under its Medicaid program.

“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,” said Timothy Goldfarb, CEO of Shands HealthCare in Gainesville.

“Hospitals are high risk locations for infections and medical mistakes. If you admit patients who do not need to be admitted, you increase their chances of getting sick,” said Patrick Burns of Taxpayers Against Fraud, a nonprofit Washington agency.

The $26 million settlement covers only part of the allegations in the case, said Marlan Wilbanks, attorney for the whistle blower. Still outstanding are allegations that the six hospitals submitted fraudulent claims for outpatient services.

The six hospitals involved in the case are Shands at Starke Hospital, Shands Alachua General Hospital, Shands Jacksonville Medical Center, Shands at the University of Florida, Shands at Lakeshore and Shands at Live Oak.

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