HealthSouth Corp. said it would defend itself "vigorously" in a civil whistleblower lawsuit against the provider joined last week by the U.S. Justice Department.
In documents filed with the Securities and Exchange Commission, HealthSouth disclosed that the federal government had joined a civil federal False Claims Act lawsuit pending since 1998 against the outpatient surgery and rehabilitative services giant in U.S. District Court in San Antonio. The Justice Department intervened in the previously disclosed case May 23, HealthSouth said.
The lawsuit alleges that Birmingham, Ala.-based HealthSouth defrauded the government by using unqualified personnel to treat patients for outpatient physical therapy services but billing Medicare as if licensed individuals had provided the services. HealthSouth operates 1,900 facilities in all 50 states, Australia, Canada, Puerto Rico and the United Kingdom, and derives about 31% of its revenue from Medicare.
The Justice Department withdrew in May from an Alabama whistleblower lawsuit against HealthSouth, filed in January 2002, after determining that it was superseded by the Texas case, which addresses the same issues concerning alleged false claims (May 13, p. 4). "All of the allegations in this complaint are identical to the allegations in the Alabama case that the government withdrew from," said a spokesman for HealthSouth who asked not to be named. The spokesman called the lawsuit a "nuisance case."
"Our outside attorneys in Washington, D.C., told us we're doing nothing wrong and have encouraged us to continue to operate the way we always have in outpatient rehab," the spokesman said.
Because the federal government has just joined the complaint, "it is not possible at this time to predict the outcome of this matter or the length of time it will take to resolve this litigation," the company said in its SEC filing. The complaint does not specify damages, HealthSouth said.