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HealthSouth pays United States $4 million to settle fraud allegations

HealthSouth Corporation has paid the United States $4 million to settle civil allegations that it defrauded Medicare by submitted fraudulent claims for prosthetic and orthotic devices. Qui tam suits in Tennessee and Florida triggered the government’s investigation.

The suit alleged that HealthSouth had arrangements with medical equipment suppliers which allowed those suppliers to illegally receive Medicare payments for prosthetic and orthotic devices. The suppliers furnished those devices to HealthSouth at no charge, and HealthSouth used them for its inpatient Medicare beneficiaries. In many instances, this resulted in double Medicare payments for the same device. In other instances, it allowed HealthSouth to underreport the true cost of treating its Medicare inpatients and to receive bonuses based on those understated costs.

The U.S. Attorney for the Middle District of Tennessee issued an October 31, 2006 press release on the settlement.

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