Shands 'tried to hide' billing problems, attorney says


Published: Saturday, August 24, 2013 at 8:29 p.m.
Last Modified: Saturday, August 24, 2013 at 8:29 p.m.

The auditor who revealed fraudulent Medicare and Medicaid billing at UF Health Shands Hospital resulting in a $26 million settlement to the government announced earlier this week that the hospital willfully withheld information from the government about the billing.

Marlan Wilbanks, the Atlanta-based attorney for auditor Terry Myers, said Myers was first hired by Shands in 2006 and found billing errors he reported to hospital administration.

"They hired him again in 2007 for the same job. This time it was very disturbing. The problems had gotten worse in many ways," Wilbanks said, adding that Myers recommended the hospital disclose the information to the government.

"We know that he gave them written proof (of fraudulent billing examples), he met with them, and yet they tried to hide it," Wilbanks said, adding that failure to report overpayments is against the law.

At that point, Myers, who Shands fired in 2007, "felt compelled to tell the government," Wilbanks said.

The $26 million settlement is the result of a lawsuit filed against Shands over the billing problems.

Wilbanks, a national specialist in qui tam, or whistleblowing cases, said the Shands settlement is one of the largest settlements he is aware of. "It's a very significant case," he said.

That appears to be true, according to a review of the U.S. Department of Justice website.

Of single hospital group settlements, only the South Texas Health System has paid the government a larger settlement, at $27.5 million in 2009, since the government established its Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative that same year.

In early July, North Florida Regional Medical Center was one of 55 hospitals nationwide that collectively paid the government $34 million for false Medicare claims.

Shands cites confusion in regulations

Shands HealthCare CEO Tim Goldfarb said the fraudulent billing centered on confusion over Medicare categories.

"There was confusion about the billing with regard to 'observation status' versus 'inpatient status' categories as a consequence of a lack of clarity in the regulations," Goldfarb said in a written statement.

Observation status was created for Medicare patients needing a little more time to determine whether hospital admission was necessary. It means smaller reimbursement payments to hospitals and potentially higher co-pays for patients.

Nationwide, a significant increase in patients receiving observational status and uncertainty over the classification led CMS (the Centers for Medicare and Medicaid Services) in April to propose new rules for classifying patients so that those staying two nights or less would be given observational status, and those staying longer would be inpatients.

"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," Goldfarb wrote. "In each case of alleged overbillings, the patient received all services ordered."

He added that "there was no intentional misconduct with regard to the billing errors," and so no one within Shands was fired.

Wilbanks, however, said, "The fact that they didn't come clean runs counter to what they're saying about the gray area" between observation and inpatient status.

Wilbanks added that the root of the billing problems was in a lack of protocols and committees providing internal oversight.

Goldfarb said the hospital refunded the money to the government immediately upon learning of the billing missteps — even prior to being made aware of the lawsuit — and also made subsequent changes to its billing procedures.

The settlement involves six Shands hospitals: UF Health Shands Hospital, UF Health Jacksonville and UF Health's three rural hospitals in Live Oak, Lakeshore and Starke, and Shands at AGH, which is no longer in existence.

Since 2009, the government has recovered more than $14.8 billion through False Claims Act cases that are part of the Health Care Fraud Prevention initiative.

The False Claims Act dates back to the Civil War, when contractors sold faulty goods to both armies. Created in 1863, and also called the Lincoln Law, it allows citizens to sue on behalf of the government and get part of the recovery.

Myers will receive approximately 18 percent of the settlement, Wilbanks said.

Contact Kristine Crane at 338-3119 or kristine.crane@gvillesun.com.

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