Encompass Health Corporation (“Encompass”), one of the nation’s largest operator of inpatient rehabilitation facilities (IRFs) has agreed to settle False Claims Act (“FCA”) allegations for $48 million. The Department of Justice (“DOJ”) alleged that Encompass’ IRFs provided inaccurate information to Medicare in order to maintain their status as an IRF, which, in turn, received a higher rate of reimbursement from the federal government. The DOJ further alleged that some of the admissions to the IRFs were not medically necessary.
Under the FCA, any person who knowingly submits or causes another to knowingly submit false claims to the government is liable to the government with a fine imposed on each false claim. Here, the federal programs at issue were Medicare and Medicaid. These programs used information about patients’ diagnoses to determine whether a facility was properly classified as an IRF. From this, Medicare and Medicaid determined the level of reimbursement that was awarded to the facility.
The DOJ alleged that beginning in 2007, Encompass’ IRFs falsely diagnosed patients with “disuse myopathy” when there was no medical need for this diagnosis. Encompass also 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. Encompass devised this scheme in order to ensure compliance with Medicare’s rules regarding certain IRF classifications and to increase the amount of Medicare reimbursement Encompass would receive.
The settlement reached by Encompass and DOJ was the product of three individual lawsuits filed under the qui tam provisions of the FCA, each styled United States ex rel. Simon, et al. v. HealthSouth Corp., et al., Case No. 08-CV-236 (M.D. Fla.); United States ex rel. Higgins v. HealthSouth Corp., Case No. 3:12 CV 2496 (N.D. Tex.); and United States ex rel. Clarke et al. v. HealthSouth Corp., Case No. 1:12 CV 853 (E.D. Va.).
Under this provision, whistleblowers who have knowledge of fraud being committed against the government can file suit on behalf of the government and receive a percentage of the recovery, if any. Here, the whistleblower claims were brought by a former contract physician employed by Encompass, a former director of Therapy Operations at Encompass, and a former Medical Director at Encompass, respectively. The terms of the settlement awarded the whistleblowers a collective $12.4 million.
The qui tam provision of the FCA is a powerful tool, but it involves many complex steps. If you believe you have knowledge of fraud being committed against the government, consider speaking with an experienced whistleblower attorney today. Josh Borsellino is a FCA attorney that works with potential whistleblowers to determine if they have a viable FCA claim. He understands the rules and regulations of whistleblower laws so don’t wait any longer – call him today at 817.908.9861 or 432.242.7118.