Friday, January 14, 2005

 San Antonio Express-News

San Antonio Whistleblower Doubly Rewarded

Health-care firm to pay huge fraud settlement – and he gets$8.1 million.

By Guillermo Contreras

Express-News Staff Writer

James DeVage spent 17 years with the Internal Revenue Service in San Antonio scrutinizing numbers for anything fishy. 

That eye for fraud helped him long after he retired, as he became the first whistleblower to file a lawsuit alleging that the country’s largest provider of rehabilitative health-care services violated the False Claims Act by cheating taxpayers. 

More than half a decade later, DeVage, 83, has the satisfaction of knowing that his complaints helped result in Alabama-based HealthSouth Corp. agreeing to pay $325 million to settle claims that it defrauded Medicare and other federal health care programs. 

HealthSouth’s deal with the Justice Department came just as the suit against the company was scheduled for trial in San Antonio on Tuesday. 

DeVage, who had no claim against the company, is to receive a $8.1 million bounty – the largest award of a handful going to whistleblowers in the case. 

“I am very elated, because I was finally able to put a stop to some of this stuff,” DeVage said Thursday.  “The reward for me is that I did something that some other people should have been doing. ... Someone had to pick up the ball and go forward with it.” 

DeVage’s involvement began in 1996, when a doctor he visited regarding back pain referred him to HealthSouth for physical therapy.  His therapy, paid for largely by Medicare, consisted of group sessions in a swimming pool. 

When he got his explanation of benefits, he questioned why the bills totaled $5,300 for 60 days of therapy. 

“Being a sharp-eyed and prudent fellow, he wanted to know why the government was being charged so much,” said John Clark, part of a team of lawyers that represented DeVage. 

His lawyers filed suit in 1998.  Court records say HealthSouth billed for each session as if it were one-on-one between each patient and a therapist instead of billing at the group rate. 

DeVage’s complaints and those lodged by other whistleblowers resulted in a Justice Department investigation. 

The department alleged that HealthSouth made false claims to Medicare and other federal programs, and that it sought reimbursement for unallowable costs, including “lavish entertainment, and certain travel costs for HealthSouth’s annual administrators’ meeting at Disney world.” 

When a company defrauds our nation’s health care programs, its steals from the American taxpayers,” U.S. Assistant Attorney General Peter Kaisler said in a news release. 

“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,” Kaisler said. 

HealthSouth said in a statement that it wants to put the issue to rest. 

“The resolution of this matter is an important step toward moving forward and resolving the issues inherited by our new management team,” HealthSouth President and CEO Jay Grimsey said.