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Encompass Health Corporation, the largest operator of inpatient rehabilitation facilities (IRFs) in the United States, agreed to pay $48 million to settle three lawsuits filed against it.

According to the U.S. Department of Justice (DOJ), Encompass Health violated the False Claims Act. The company allegedly provided inaccurate information to Medicare to maintain the status of its facilities as IRFs and to earn a higher rate of reimbursement.

In addition, the DOJ found that some of the admissions of its IRFs were not medically necessary. The IRFs allegedly falsely diagnosed patients with what they referred to as “disuse myopathy” when there was no clinical evidence for this diagnosis.  The IRFs allegedly admitted patients who were not eligible for admission because they were too sick or disabled to participate in or benefit from intensive inpatient therapy.

The settlement was the result of a comprehensive and lengthy investigation into the nationwide scheme to defraud the Medicare and Medicaid.

In a statement, Assistant Attorney General for the DOJ’s Civil Division, Jody Hunt said, “This settlement demonstrates our commitment to ensuring that those who participate in federal healthcare programs follow the rules. Medicare and Medicaid providers who seek to profit inappropriately at the expense of taxpayers will be held accountable.”

 Whistleblowers filed lawsuits on behalf of the government against Encompass Health

Three whistleblowers filed lawsuits on behalf of the federal government against Encompass Health.

The plaintiffs include Dr. Emese Simon, a former contract physician at the company’s IRF in Sarasota, Florida; Melissa Higgins, former Director of Therapy Operations at the company’s IRF in Arlington, Texas; and Dr. Darius Clarke, the former Medical Director at the company’s IRF in Richmond, Virginia and his company, Restorative Health & Wellness P.L.L.C.

They sued Encompass Health under the qui tam or whistle provision of the False Claims Act. The whistleblower’s collective share from the settlement is $12.4 million.

Encompass Health was previously known as HealthSouth Corporation.