Inpatient rehab operator Encompass Health Corporation allegedly admitted patients who were ineligible because they were too sick or disabled to participate in intensive therapy, according to a settlement with the Department of Justice announced Friday.
Encompass, formerly known as HealthSouth Corporation, is the nation’s largest IRF operator. The company has agreed to pay $48 million to resolve allegations that physicians at some of its locations used inaccurate information to maintain Medicare status or earn higher reimbursements. The Department of Justice argued that some of the company’s admissions were not medically necessary, either because patients were too sick for therapy or because the facilities falsely diagnosed patients with “disuse myopathy” without clinical evidence.
Inpatient rehab facilities typically require patients to spend at least three hours a day in therapy.
The settlements resolve allegations raised in three False Claims lawsuits filed by Emese Simon M.D., a former contract physician employed at an Encompass inpatient rehabilitation facility in Sarasota, FL; Melissa Higgins, the former Director of Therapy Operations at Encompass’s inpatient rehabilitation facility in Arlington, TX; and Darius Clarke, M.D., the former Medical Director at Encompass’s inpatient rehabilitation facility in Richmond, VA.
In a statement Friday, Encompass said a seven-year investigation never turned over evidence of fraud, but the cost of fighting the lawsuits would have been burdensome. The Department of Justice never intervened in the cases, meaning Encompass would have had to handle each one separately.
“From the beginning, we believed the allegations under investigation were without merit,” said President and CEO Mark Tarr. “The evidence establishes that Encompass Health did nothing wrong. But to stop this interminable investigation and avoid further expense, we decided it is in the best interests of Encompass Health and its shareholders to settle with DOJ and end the related litigation.”
Under the whistleblower provisions of the False Claims Act, the three plaintiffs will split a $12.4 million share of the settlement.
