Department of Justice
FOR
IMMEDIATE
RELEASE CIV
THURSDAY, DECEMBER 30,
2004 (202) 514-2007
WWW.USDOJ.GOV TDD (202) 514-1888
HEALTHSOUTH TO PAY UNITED
STATES $325 MILLION
TO RESOLVE MEDICARE
FRAUD ALLEGATIONS
WASHINGTON, D.C.
– HealthSouth Corporation, the nation’s largest provider
of rehabilitative medicine services, has agreed to pay the
United States $325 million to settle allegations that the
company defrauded Medicare and other federal healthcare
programs, the Department of Justice announced today.
“Health care
fraud impacts every American citizen. When a company
defrauds our nation’s health care programs, it steals from
the American taxpayers,” said Assistant Attorney General
Peter Keisler, head of the Justice Department’s Civil
Division. “HealthSouth’s fraud on Medicare was driven
both by longstanding business practices in its outpatient
physical therapy business and improprieties in its
inpatient rehabilitation business.”
The allegations
involving the outpatient therapy services were the subject
of a federal lawsuit in San Antonio, Texas. “Today’s
settlement should send a strong message that the
government will be persistent in pursuing those who engage
in fraud and making sure that they pay a high price for
their misdeeds,” stated United States Attorney Johnny
Sutton in San Antonio, Texas.
Under today’s
agreement, HealthSouth will pay $325 million to resolve a
range of allegations involving outpatient physical therapy
services and inpatient rehabilitation admissions.
·
$169 million
to resolve allegations that HealthSouth submitted claims
for reimbursement for outpatient therapy services to
Medicare, the Department of Defense TRICARE program, or
the Department of Labor Federal Employees’ Compensation
Act program that lacked a properly certified plan of care,
that were rendered by persons other than licensed physical
therapists, or that were billed as one-on-one services
were not provided.
·
$89 million
to resolve claims that HealthSouth submitted to Medicare
for reimbursement on its hospital cost reports and home
office cost statements a range of unallowable costs, and
that HealthSouth submitted to Medicare improper claims for
individual inpatient discharges. The unallowable costs
included lavish entertainment and certain travel costs for
HealthSouth’s annual administrators’ meeting at Disney
World, and certain board of director fees, public
information expenses, tax penalty expenses, and “favorable
lease” claims related to rehabilitation facilities
acquired from National Medical Enterprises and NovaCare.
The improper claims for individual patient discharges
involved false claims for Medicare ??__?? payments –
intended to pay only for extraordinarily costly patients –
for 11 inpatient facilities acquired by HealthSouth and
claims for Doctor’s Hospital Arthritis Unit admissions
that were medically unnecessary.
·
$65 million
to resolve claims that HealthSouth submitted to Medicare
for reimbursement on its hospital cost reports and home
office cost statements for a range of unallowable costs.
· $1 million
to resolve allegations that several skilled nursing
facilities owned by HealthSouth from November 1997 through
January 1998 unlawfully billed to Medicare the cost of
skilled labor for infusion therapy services as “ancillary
services” to avoid routine limits on Medicare payments for
skilled labor at skilled-nursing facilities.
· $736,410 to
resolve allegations that HealthSouth and its subsidiary,
HealthSouth Bakersfield Rehabilitation Hospital sought
reimbursement for various categories of unallowable costs
on 1991 and 1992 Bakersfield Rehabilitation Hospital cost
reports.
Some of the
civil issues resolved as part of today’s settlement
resolve allegations in lawsuits filed by relators,
commonly known as “whistleblowers,” under the False Claims
Act. This law allows a relator who qualifies under the
statute to receive a share of the settlement proceeds
recovered in that lawsuit. Today’s settlement resolves
claims brought by relators in United States ex rel.
James DeVage v. HealthSouth Corporation, et al (W.D.
Tex.); United States ex rel. Manning v. HealthSouth
Corporation (W.D. Tex.); and United States ex rel.
Brupbacher & Associates and Michael C. Freeman v. National
Institutional Pharmacy Services, Inc. (D. N.Mex.). As
the relator’s award, James DeVage will $8,139,498; DeWayne
Manning will receive $4,069,749, and Brupbacher Associates
and Michael Freeman will share $150,000.
As part of today’s
agreement, HealthSouth entered into a Corporate Integrity
Agreement (CIA) with the United States Department of
Health and Human Services, Office of Inspector General,
requiring the company to engage in significant compliance
efforts over the next five years. Among other provisions,
the CIA requires HealthSouth to engage independent review
organizations to review the accuracy of the company’s
claims for inpatient and outpatient rehabilitation therapy
furnished to Medicare beneficiaries.
Under a separate
administrative agreement also executed today, HealthSouth
and the Centers for Medicare & Medicaid Services agreed to
a withdrawal of all pending administrative appeals and
related federal court cases, and the administrative
closure of all Medicare cost reports through December 31,
2003.
The
investigation and resolution of these matters was achieved
by the Department of Justice, Civil Division, Commercial
Litigation Branch, the United States Attorneys’ Offices
for the Northern District of Alabama, the Western District
of Texas, the Central District of California, the District
of New Mexico and the Southern District of New York; the
Department of Health and Human Services, Office of
Inspector General and Office of Counsel to the Inspector
General; the Department of Health and Human Services,
Office of General Counsel (CMS) Division and the
outstanding investigative efforts of the Department of
Health and Human Services, Office of Inspector General,
Atlanta Region (Birmingham Office). |
