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Whistleblower Legal Team Announces Encompass Health Corporation, formerly HealthSouth Corporation, Has Agreed to Pay $48,000,000 to Settle Whistleblower Cases

BERKELEY HEIGHTS, N.J., June 28, 2019 /PRNewswire/ -- Encompass Health Corporation, formerly HealthSouth Corporation ("Encompass") has agreed to pay $48,000,000 to resolve allegations that it violated the False Claims Act ("FCA") by providing inaccurate information on Patient Assessment Instrument forms ("IRF-PAIs") for patients Encompass improperly indicated required rehabilitation for neuromuscular disorders. It was alleged that certain patients were diagnosed with a myopathy, including "disuse" myopathy and proximal myopathy, when not all such patients had a myopathy. The information contained on the IRF-PAI is used by the Centers for Medicare and Medicaid Services to determine whether Inpatient Rehabilitation Facilities ("IRFs") are entitled to obtain or maintain classification as an IRF for reimbursement purposes. As a result, it was alleged that Encompass submitted false claims to Medicare and Medicaid by representing that some of the IRFs owned and/or operated by Encompass were appropriately classified as an IRF for federal program reimbursement purposes when they were not. 

Additionally, it was alleged that Encompass, through its subsidiary IRFs, knowingly submitted false claims to Medicare and Medicaid by improperly causing the assignment of certain patients to a Case Mix Group that provided reimbursement at a higher rate from Medicare than it was otherwise entitled to.  It was further alleged that Encompass knowingly submitted false claims to Medicare and Medicaid by admitting patients to its facilities for whom IRF services were not medically necessary and/or did not meet the IRF coverage criteria, In particular, it was alleged that Encompass IRFs admitted patients: (1) who were too sick or disabled to be able to participate in and benefit from therapy; (2) for whom an intensive inpatient rehabilitation program was not medically necessary; or (3) who did not require supervision by a rehabilitation physician at least three times a week; or (4) who did not need did therapeutic intervention from multiple therapy disciplines.

Multiple cases were resolved as part of this settlement.  The Whistleblower Legal Team's Managing Partner Robert Magnanini and Senior Managing Partner David Stone served as lead counsel in the settled case United States ex rel. Melissa Higgins v. HealthSouth Corp., Case No. 8:14-cv-2769-T-33AEP (M.D. Fla.).  Joe Kendall, of the Kendall Law Group, PLLC, and later John Vento of Trenam Law served as local counsel.  The Government Attorneys who helped achieve the settlement were John Henebery, Michael Shaheen, and Gordon Shemin of the United States Department of Justice, and Sean Keefe of the U.S. Attorney's Office for the Middle District of Florida.

"We found Encompass' alleged activities in this case particularly troubling given the sheer size of the fraud and the apparent blatant disregard for the Government's IRF requirements," Magnanini stated.  "Our relator is a conscientious former Encompass (HealthSouth) employee who blew the whistle primarily because of her concerns about patient safety and fraudulent diagnosis/billing practices.  We are hopeful the settlement we have reached today will go a long way in preventing any possible future fraud and improving patient safety at Encompass for many years to come."   


The Whistleblower Legal Team is a group of accomplished trial lawyers and experienced professionals including seasoned investigators, damages experts, and consultants with decades of experience guiding whistleblowers to successful cases. They have represented whistleblowers in trial courts all the way up to the United States Supreme Court, returning more than 3.4 billion dollars to the government in False Claims Act cases, as well as cases filed under IRS, SEC, and other whistleblower statutes.  The team has assisted its clients and various Federal and State Governments in some of the largest HealthCare Fraud recoveries in history including cases involving McKesson, Inc., Forest Laboratories, Cephalon, Medco, and Johnson & Johnson and Janssen Pharmaceuticals, Inc. 

For more about The Whistleblower Legal Team, visit their website:

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Robert Magnanini


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SOURCE The Whistleblower Legal Team