HealthSouth pays $7.9 million to settle
HealthSouth, the nation’s largest outpatient surgery and rehabilitation chain, has agreed to pay $7.9 million to settle allegations that the company overcharged federal health programs. The Justice Department announced the settlement recently, saying the health care provider had agreed to pay the penalty, plus 7% interest from Oct. 1, 2000, without admitting liability. HealthSouth is based in Birmingham, AL.
Acting Assistant Attorney General Stuart E. Schiffer, JD, said the government alleged that HealthSouth overcharged Medicare and the Defense Department’s TRICARE program for equipment and supplies purchased from G.G. Enterprises, a corporation owned by the parents of HealthSouth chairman and CEO Richard M. Scrushy. The allegations involved costs related to three rehabilitation hospital leases, the purchase of certain computers and related goods and services, and the abandonment of computer assets owned by another company acquired by HealthSouth in 1994.
HealthSouth said the previous company’s treatment of those costs in cost reports submitted for reimbursement was inconsistent with Medi-care regulations, resulting in overpayments. In a statement released at the time of the settlement, HealthSouth officials said they decided to settle the matter to avoid the time, expense, and distraction of litigation. Scrushy said, "While we devote significant resources to complying with all reimbursement regulations, the volume and complexity of those regulations make it inevitable that differences in interpretation and even errors may occur."
The settlement stems in part from a lawsuit filed by whistle-blower Greg Madrid, a former HealthSouth billing clerk. As part of the settlement, Madrid will receive $1.48 million.
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