On June 28, the Department of Justice announced that Encompass Health has agreed to pay $48 million to resolve False Claims allegations relating to their inpatient rehabilitation facilities (IRFs). This comes after previously disclosing the matter in 2013 and accruing a loss contingency in the amount of the final settlement in their financial statements as of the end of last year.
According to the Department of Justice, Encompass Health 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.
“This settlement demonstrates our commitment to ensuring that those who participate in federal healthcare programs follow the rules,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “Medicare and Medicaid providers who seek to profit inappropriately at the expense of taxpayers will be held accountable.”
Additionally, the Department of Justice stated that the settlement resolves allegations raised in three lawsuits filed by physician whistleblowers covered by the provisions of the False Claims Act, which permits private individuals to sue on behalf of the government for false claims and to share in any recovery. In this instance, the whistleblowers’ collective share of the settlement will be $12.4 million.
While Encompass Health denies any wrongdoing per the terms of the settlement, they had to pay a heavy price for alleged False Claims violations originating from physician whistleblowers. One way hospitals and health systems can mitigate compliance risk is to promote organization-wide compliance policies and procedures with buy-in from executives, administrators, and physicians. In our 2019 Physician Engagement Checklist for Legal and Compliance Professionals, we outline how legal and compliance professionals can engage with physicians in creating a culture of compliance.
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