A whistleblower lawsuit filed by the president of a consulting firm hired by Shands HealthCare resulted in the $26 million settlement of alleged False Claims Act (FCA) violations, according to an announcement by the Department of Justice (DOJ). Between 2003 and 2008, six hospitals in the Shands HealthCare network knowingly submitted inpatient claims to Medicare, Medicaid, and TRICARE for certain services and procedures that Shands knew were correctly billable only as outpatient services or procedures, the government alleged. The consultant, Terry Myers of the health care consulting firm YPRO Corp., was contracted by Shands during 2006 and 2007 to conduct audits of its billing processes. The suit included allegations under the Florida False Claims Act as well. The whistleblower will receive some portion of these settlements, but the amount is not yet determined. According to Shands, the whistleblower was hired by Shands as an independent consultant to conduct a routine audit of its billing practices. The auditor found inconsistencies in Shands’s billing processes for some patients, indicating that Shands may have billed some short overnight stays as inpatient admissions rather than less expensive outpatient or observation services. The patients received all of the services that were included in the claims, and the failure to provide high-quality care was not in question, according to Melissa Blouin, director of news and publications, UF&Shands, the University of Florida Academic Health Center. Blouin says that Shands officials fully cooperated with the state and federal investigation and negotiated the settlement agreement announced today to avoid long and costly litigation. Shands does not admit any wrongdoing and has not admitted to any liability. “Shands regularly and proactively conducts audits of its billing practices. It makes constant improvements to remain current with the complicated, evolving health care regulatory environment, which is subject to continued change in policy and guidelines,” said Blouin. Shands says that it took immediate steps to correct the vulnerabilities in its billing processes uncovered in Myers’s firm’s audit and outlines those steps in Blouin’s statement. They included improvements to case management protocols and utilization review processes, the use of improved software, implementation of new policies and procedures, supplemental employee training, and the engagement of expert physician advisers to help assess coding. Shands does not say in its statement whether or not it has a compliance program in place, and the DOJ announcement does not mention that as a factor in its settlement. At this time, the DOJ announcement does not say that Shands was put under a corporate integrity agreement as part of its settlement agreement, which could mean there are mitigating circumstances. The DOJ, as it often does, used the announcement of the settlement to tout the success of its anti-fraud efforts, including the Health Care Fraud Prevention and Enforcement Action Team initiative, commonly referred to as HEAT, and the coordination of efforts between different federal and state investigators. The details of the investigation and insight into the entire episode are not readily available and were not reviewed by G2 Intelligence, so it is not possible to accurately determine what part the whistleblower played in the investigation and resulting FCA case. There are many questions this case raises. In the press release, Timothy M. Goldfarb, CEO of Shands HealthCare in Gainesville said, “We hold ourselves accountable for the highest standards of care and service. The case in question does not involve the failure to provide high-quality patient care, but rather inconsistent billing processes. We proactively initiated an independent audit that identified some opportunities to improve billing processes at Shands. We took immediate steps to make improvements.” The DOJ announcement said that of the $26 million settlement, $25,170,400 will go to Medicare and other federal health care payers. The settlement also resolved allegations under the Florida False Claims Act; the state of Florida will receive $829,600. Myers’s portion of these recoveries has yet to be determined. Avoiding Future Problems One lesson that can be gleaned from this case relates to the process a health care entity uses when contracting with consultants or other independent professionals when they will be working on compliance-sensitive projects. Make sure your contract requires the full disclosure of any compliance issues the consultant encounters while working for your laboratory, whether or not they are directly related to the services they are performing on your behalf. Make sure there is a follow-up exit conference to discuss, in great detail, the variances and compliance issues reported in any report issued by the consultant. Make it a requirement that the audit report recommend steps your laboratory should take to correct any problems discovered during an audit and then make sure all of the recommendations are followed up or document the reason a particular recommendation was not followed. Have the consultant return after an appropriate time to assess your efforts at following up on his or her findings. Takeaway: Independent consultants can add real value to your compliance program by providing an outsider’s perspective, but they can also pose risks to your laboratory if it does not account for all of the things found in any report the consultant issues.