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Shands Hospitals Settles for $26 Million in Healthcare Whistleblower Case

The Department of Justice announced last week that Shands Hospitals, located in Florida, will pay $26 million in a settlement over allegations of improper billing practices that resulted in overpayments by Medicaid and Medicare. The qui tam whistleblower in this case alleged that Shands routinely admitted Medicaid and Medicare patients into its hospitals, despite the fact that it was not medically necessary for the patients to be admitted or that services could have been provided in an outpatient setting instead. The healthcare fraud case was filed in 2008 by Terry Myers, president of the YPRO Corporation, a heathcare consulting firm that provides services to hospitals nationwide. YPRO was hired by Shands to audit six of its hospitals to determine if Medicaid and Medicare rules were being followed.

According to the complaint filed by the whistleblower, after the initial audit in 2006, serious billing, coding, and compliance issues were uncovered, at which time Mr. Myers advised Shands to disclose the problems to the government. (By law, hospitals are required to report all known overpayments to the government.) Despite Mr. Myers’s recommendations, and despite legal requirements, Shands allegedly did not disclose the information and continued its fraudulent practices. Mr. Myers’s firm was hired again in 2007, and he claims that he again found evidence of the same billing errors as before. This time, however, the errors were even more numerous. Mr. Myers allegedly advised Shands to disclose the errors, and even offered to provide training to the hospitals’ staff to try to reduce future errors. The complaint states that, once again, Shands declined Mr. Myers’s advice, and the healthcare fraud continued.

“I knew that by filing this lawsuit that I was potentially risking my career because I feared that some hospitals would not be interested in using my company again once my lawsuit became public. People who commit fraud are not interested in hiring people like me who won’t sit by quietly and be a part of a fraudulent scheme,” stated Myers in a press release. “I feel vindicated with the $26,000,000 settlement and I am looking forward to continuing the fight with regard to the remaining claims that were not settled today. I do not believe for a second that Shands would have paid this amount of money if my allegations were not true.”

This lawsuit was filed under the False Claims Act, which is a law specifically designed to protect U.S. taxpayers from having their money stolen by individuals and companies who commit fraud against government programs, such as Medicaid and Medicare. The False Claims Act allows individuals who have direct knowledge of fraudulent activities to hire attorneys to bring lawsuits on behalf of the U.S. government. Unless the case is ultimately successful and the government recovers the money lost, the whistleblowers and their attorneys receive no money. However, if the lawsuit is successful, the whistleblower is entitled to an award based upon a percentage of the governments’ recovery.

The $26,000,000 to be paid by Shands is only a partial settlement, and only covers the healthcare whistleblower claims concerning inpatient billing. It does not resolve the remaining allegations dealing with the fraudulent submission of outpatient claims by the six hospitals. It is still unknown as to the amount of money Mr. Myers will recover as his reward from this healthcare fraud case, but the amount will no doubt be substantial.

If you are aware of healthcare fraud you might be able to bring your own healthcare whistleblower lawsuit under the False Claims Act. If you wish to consult with a qui tam attorney, please fill out our Confidential Case Evaluation form, or call (202) 973-0900 to speak with a lawyer at Tycko & Zavareei, LLP.