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HealthSouth settles government fraud charges for $325 million

Compliance Monitor, January 5, 2005

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Embroiled in controversy, Birmingham, AL-based HealthSouth agreed on December 30 to pay the U.S. government $325 million to settle charges that it defrauded Medicare and other government health programs, the Boston Globe reported.

"HealthSouth's fraud on Medicare was driven both by longstanding business practices in its outpatient physical therapy business and improprieties in its inpatient rehabilitation business," said Assistant Attorney General Peter Keisler, the Globe reported.

The settlement is the latest chapter in a long line of legal problems for the company. Seventeen people have already been named in a criminal investigation into alleged accounting fraud that led to the company overstating its earnings by $2.6 billion. Among those charged is former chief executive officer Richard Scrushy, whose trial is expected to begin this week.

The settlement is the result of actions initiated by a group of San Antoino-based whistleblowers under the federal False Claims Act. According to the Globe, one of the whistleblowers will receive $8.1 million from the total settlement and the others will receive lesser amounts.

Under the terms of the settlement, HealthSouth will make an initial payment of $75 million and will make quarterly payments over the next three years to cover the balance.

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