Birmingham, Alabama-based Encompass Health Corporation, the nation’s largest operator of inpatient rehabilitation facilities (IRFs), is paying the U.S. $48 million to settle three whistleblower lawsuits the government investigated and supported.

Formerly known as HealthSouth Corporation, Encompass Health operates an extensive network of IRFs, home health providers, and hospice care centers throughout the country. According to the whistleblower complaints, some of the Encompass IRFs submitted false patient data to Medicare to maintain their classification as an IRF and to bill the government at higher reimbursement rates.

Medicare uses patients’ diagnoses to determine whether a facility is properly classified as an IRF and to determine the level of reimbursement for specific patients. In investigating the whistleblowers’ allegations, the U.S. Department of Justice determined that in 2007 the Encompass IRFs started falsely diagnosing patients as having “disuse myopathy” when they didn’t have that condition.

The whistleblower complaints also alleged that Encompass IRFs admitted patients who were too sick or disabled to benefit from the rehabilitative therapies provided just so the company could bill Medicare.

“This important civil settlement concludes a lengthy, comprehensive investigation that brought to light a nationwide scheme that the government contends was intended to defraud our fragile public health programs,” said U.S. Attorney Maria Chapa Lopez. “In doing so, we confirm our commitment to civil health care fraud enforcement as a key component of the mission of our office.”

The whistleblowers filed separate False Claims Act lawsuits on behalf of the U.S. government after they witnessed Encompass IRFs’ alleged fraud. The complaints were brought by Dr. Emese Simon M.D., a former contract physician employed at an Encompass inpatient rehabilitation facility in Sarasota, Florida; Melissa Higgins, a former therapy director at Encompass’s IRF in Arlington, Texas; and Dr. Darius Clarke M.D., the former medical director at Encompass’s IRF in Richmond, Virginia. Dr. Darius filed the whistleblower suit along with his company, Restorative Health & Wellness P.L.L.C.

The DOJ said that the whistleblowers will share a $12.4 million award – nearly 26% of the 48 million recovery – for exposing the alleged Encompass fraud schemes to the government.

Whistleblowers are the key to exposing corporate wrongdoing and government fraud. A person who has first-hand knowledge of fraud or other wrongdoing may have a whistleblower case. Before you report suspected fraud or other wrongdoing – before you “blow the whistle” – it is important to make sure you have a valid claim and that you are prepared for what lies ahead. Beasley Allen has an experienced group of lawyers dedicated to handling whistleblower cases. The lawyers on our firm’s Whistleblower Litigation Team are Archie Grubb, Larry Golston, Lance Gould and Paul Evans. These lawyers will be glad to discuss any potential whistleblower claim either in person or by phone.

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