Encompass Health settles three whistleblower suits for $48 million

by Ben Vernia | July 3rd, 2019

On July 2, the Department of Justice announced that Encompass Health Corp. has agreed to pay $48 million to settle allegations brought in three qui tam suits

Encompass Health Corporation (formerly known as HealthSouth Corporation), the nation’s largest operator of inpatient rehabilitation facilities (IRFs), has agreed to pay $48 million to resolve allegations that some of its IRFs provided inaccurate information to Medicare to maintain their status as an IRF and to earn a higher rate of reimbursement, and that some admissions to its IRFs were not medically necessary.

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Medicare and Medicaid use information about patients’ diagnoses to determine whether a facility is properly classified as an IRF, and to determine the level of reimbursement the facility is awarded for specific patients. The government alleged that beginning in 2007, in order to insure compliance with Medicare’s rules regarding classification as an IRF, and to increase Medicare reimbursement, some Encompass IRFs falsely diagnosed patients with what they referred to as “disuse myopathy” when there was no clinical evidence for this diagnosis. Additionally, Encompass IRFs allegedly admitted patients who were not eligible for admission to an IRF because they were too sick or disabled to participate in or benefit from intensive inpatient therapy.

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The settlements resolve allegations raised in three lawsuits filed by Dr. Emese Simon M.D., a former contract physician employed at an Encompass inpatient rehabilitation facility in Sarasota, Florida; Melissa Higgins the former Director of Therapy Operations at Encompass’s inpatient rehabilitation facility in Arlington, Texas; and Dr. Darius Clarke M.D. the former Medical Director at Encompass’s inpatient rehabilitation facility in Richmond, Virginia, and his company, Restorative Health & Wellness P.L.L.C. The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. Here, the whistleblowers collective share of the settlement will be $12.4 million.

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The Government did not announce the relators’ share of the recovery.

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