Shands Teaching Hospital & Clinics, Inc. (Shands) will pay $26 million to settle allegations that it fraudulently charged the government for Medicaid, Medicare and other health care payments, according to the Department of Justice (DOJ). Shands operates a chain of teaching hospitals across the state of Florida.

The DOJ had alleged that Shands knowingly billed for inpatient treatment when it provided outpatient care. This practice results in the facility receiving inflated sums from the government as inpatient care is more costly to a medical facility than outpatient care.

“Medicare and Medicaid fraud accounts for billions of dollars of wasted taxpayer dollars every year,” commented James Kauffman, an attorney with the Levin, Papantonio law firm who practices in the areas of qui tam or whistleblower and False Claims Act litigation.

Shands’ alleged dishonest behavior was uncovered, in part, because of the the actions of a whistleblower. Under the False Claims Act, private citizens may bring a lawsuit against any entity they have knowledge of having defrauded a governmental agency. The law provides that these individuals may share in any amount recovered on behalf of the government and the government may intervene in a lawsuit to carry out the prosecution of the offending party.

“The False Claims Act provides support for the brave actions of whistleblowers,” Mr. Kauffman commented. “If not for the actions of individuals against the likes of these private corporations, often their misdeeds would go unknown, unreported and unprosecuted – costing taxpayers greatly.”

According to the DOJ’s release, Terry Myers, the individual that originally reported the fraud and filed suit, will share in the $26 million dollar recovery, though the exact amount of his share has yet to be determined.

It’s suspected that government reimbursement programs, such as Medicare and Medicaid, are fraudulently exploited by business and individuals, costing taxpayers billions of dollars each year. In May of 2009, at the direction of the Obama administration, the Department of Health and Human Services and the Department of Justice partnered to create the Health Care Fraud Prevention and Enforcement Action Team (HEAT) to combat healthcare fraud. Since that time, the HEAT as recovered more than $14 billion dollars through the False Claims Act.

Joshua is a writer and researcher with Ring of Fire. Follow him on Twitter @Joshual33.