Encompass Health Corporation, based in Birmingham, Alabama, is one of the United States’ largest providers of post-acute healthcare services, offering both facility-based and home-based post-acute services in 36 states and Puerto Rico through its network of inpatient rehabilitation hospitals, home health agencies, and hospice agencies.

In California they operate the Encompass Health Rehabilitation Hospital of Bakersfield, on 5001 Commerce Drive, and Encompass Health Rehabilitation Hospital of Modesto located at 1303 Mable Avenue.

Encompass Health Corporation (formerly known as HealthSouth Corporation), has agreed to pay $48 million to resolve allegations that some of its inpatient rehabilitation facilities (IRFs) provided inaccurate information to Medicare to maintain their status as an IRF and to earn a higher rate of reimbursement, and that some admissions to its IRFs were not medically necessary.

Medicare and Medicaid use information about patients’ diagnoses to determine whether a facility is properly classified as an IRF, and to determine the level of reimbursement the facility is awarded for specific patients.

The government alleged that beginning in 2007, in order to insure compliance with Medicare’s rules regarding classification as an IRF, and to increase Medicare reimbursement, some Encompass IRFs falsely diagnosed patients with what they referred to as “disuse myopathy” when there was no clinical evidence for this diagnosis.

Additionally, Encompass IRFs 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.

“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 settlements resolve allegations raised in three lawsuits filed by Dr. Emese Simon M.D., a former contract physician employed at an Encompass inpatient rehabilitation facility in Sarasota, Florida; Melissa Higgins the former Director of Therapy Operations at Encompass’s inpatient rehabilitation facility in Arlington, Texas; and Dr. Darius Clarke M.D. the former Medical Director at Encompass’s inpatient rehabilitation facility in Richmond, Virginia, and his company, Restorative Health & Wellness P.L.L.C.

The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.

Here, the whistleblowers collective share of the settlement will be $12.4 million.

The three cases are captioned 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.). The claims resolved by the settlement are allegations only, and there has been no determination of liability.