Thomas et al v. Healthsouth Corporation et al

Middle District of Florida, flmd-8:2016-cv-02956

COMPLAINT against Healthsouth Corporation, Affiliated Entities of Healthsouth Corporation to be named, Healthsouth Rehabilitation Hospital of Newnan, LLC with Jury Demand (Filing fee $ 400 receipt number TPA 39737) filed by Donna Turnipseed, Jeanie Thomas.

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0 PageID 1 V IN THE UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION UNITED STATES ex rel. JEANIE THOMAS and DONNA TURNIPSEED, 8: 16 cv 2956T30 JSS Civil Action No. FILED IN CAMERA AND UNDER SEAL Plaintiffs - Relators, Jury Trial Requested HEALTHSOUTH CORPORATION,) AFFILIATED ENTITIES OF HEALTHSOUTH CORPORATION) TO BE NAMED, and HEALTHSOUTH REHABILITATION HOSPITAL OF NEWNAN, LLC, Defendants. COMPLAINT This is a qui tam action by Plaintiffs - Relators Jeanie Thomas and Donna Turnipseed ("Relators"), through their undersigned counsel, on behalf of themselves and the United States of America ("United States"), to recover treble damages and civil penalties arising from the actions of Defendants HealthSouth Corporation, Affiliates of Health South Corporation to be named, and Health South Rehabilitation Hospital of Newnan, LLC ("Defendants"), in violating the Federal False Claims Act, 31U.S. C. § 3729 et seq. As set forth below, the Defendants TRA - 39737 s - l 0 PageID 2 wrongfully obtained and retained substantial funds from government healthcare programs, including Medicare, through false and / or fraudulent statements, records, and claims made and caused to be made by Defendants and / or their agents and employees, in connection with medical services provided by Defendants since at least December 2014. Relators allege, based upon their personal knowledge and relevant documents and information, the following facts: Jurisdiction and Venue 1. This action arises under the False Claims Act, 31U.S. C. $ 3729 et seq. Jurisdiction over this action is vested in this Court by 31U.S. C. $ 3732 (a) and 28U.S. C. § 1331, in that this action arises under the laws of the United States. 3. Venue is proper in this district under 31U.S. C. $ 3732 (a) . One or more Defendants can be found, resides, and / or transacts business within the district. The Parties and Related Entities Defendant HealthSouth Corporation ("HealthSouth") is a Delaware corporation with its corporate headquarters in Birmingham, Alabama. HealthSouth 0 Pageld 3 is one of the nation's largest owners and operators of inpatient rehabilitation hospitals (also known as " Inpatient Rehabilitation Facilities " or " IRF") . HealthSouth operates IRFs in 29 states and Puerto Rico. HealthSouth determines policies and practices that apply in the IRFs that it operates nationwide, including the policies and practices at issue in this action. Affiliated entities of HealthSouth to be named are believed to participate in the ownership and / or operation of these IRFs nationwide. 6. Most of HealthSouth's patients are over age 65, and Medicare provides a substantial part of HealthSouth's revenues from inpatient rehabilitation. 7. One of HealthSouth's inpatient rehabilitation facilities is incorporated as Defendant HealthSouth Rehabilitation Hospital of Newnan, LLC Corporation ("HealthSouth - Newnan") . HealthSouth - Newnan is a Delaware corporation with its principal place of business at 2101 E. Newnan Crossing Blvd, Newnan, GA, 30265. HealthSouth - Newnan opened in December 2014. Relators are two professionals with almost 30 years of combined experience in inpatient rehabilitation facilities, and are citizens of the United States and 0 Pageld 4 residents of the State of Georgia. Relators were hired by Defendants in 2014 to help open the HealthSouth - Newnan IRF in December 2014. 9. Relator Jeanie Thomas served as Director of Marketing Operations for HealthSouth - Newnan from July 2014 until March 2016. She was responsible for marketing and admissions for this 50 - bed hospital facility. She served on the " start - up team, " and hired, trained, and supervised a team of 11 clinical staff. 10. Relator Donna Turnipseed was hired and served as the Director of Case Management from October 2014 to September 2015, at which time she stepped down to the staff Case Manager position, the position she currently holds at the time of filing this action. She has been responsible for case management, including assessments, treatment planning and therapeutic interventions. She has provided direction regarding quality, timeliness, appropriateness of services, patient / payor expectations, length of stay, discharge planning and knowledge of community resources. By virtue of their positions, Relators had an opportunity to participate in extensive HealthSouth corporate training, to learn of Health South's corporate policies, practices and actions as they related to HealthSouth's IRFs nationally, and Case 8: 16 - cv - 02956 - VAAÇ - JSS Document 1 Filed 10 / 18 / 16, Page 5 of 40 Pageld 5 to be closely involved in the day - to - day operations of the HealthSouth - Newnan IRF. As time progressed, Relators became more and more uncomfortable with Defendants ' practices which they believe to be in material violation of the legal requirements related to both the admission and discharge of patients. 12. Based on Relators ' observations and evidence described below, Defendants have devised and implemented schemes to defraud Medicare and other federal healthcare programs, to increase HealthSouth's revenues and profits by systematically violating Medicare requirements at HealthSouth's IRFs nationally (including HealthSouth - Newnan) . 13 Relators thus have brought this action on behalf of the United States, including its agency, the Department of Health and Human Services ("HHS") and its component, the Centers for Medicare & Medicaid Services ("CMS, " formerly the Health Care Financing Administration ("HCFA")) . 14. Prior to becoming aware of any known public disclosure under subsection (e) (4) (a) of 31U.S. C. $ 3730, Relators voluntarily disclosed to the Government the information on which the allegations or transactions in this claim are based; and Relators individually and collectively have knowledge that is independent of and An Case 8: 16 - cv - 02956 - VAAÇ - JSS Document 1 Filed 10 / 18 / 16 Page 6 of 40 Pageld 6 materially adds to any publicly disclosed allegations or transactions that may exist, and have voluntarily provided the information to the Government before filing an action under this section. 31U.S. C. $ 3730 (e) (4) (A) . Relators are each, separately and jointly, the original source of these allegations as defined in 31U.S. C. $ 3730 (e) (4) (B) . The Medicare Program ' 15. In 1965, Congress enacted Title XVIII of the Social Security Act to pay the costs of certain health care services for eligible individuals. 42U.S. C. $ $ 1395 et 0 seq. 16. Medicare consists of two parts. Part A provides coverage for hospital costs, services rendered by hospitals, skilled nursing facilities, home health care, and hospice care. Part B, on the other hand, provides coverage for physician services, outpatient hospital care, and other miscellaneous medical services such as physical and occupational therapy. See 42U.S. C. $ $ 1395j - 1395w - 4. | The other government healthcare programs, such as TRICARE / CHAMPUS, have similar requirements and have similarly been defrauded by the Defendants. Whenever the term Medicare is used, the allegations also include that other government healthcare programs were similarly defrauded. 0 PageID 7 17. TheU.S. Department of Health and Human Services ("HHS") is an agency of the United States whose activities, operations, and contracts are paid from federal funds. The Centers for Medicare and Medicaid Services ("CMS") is a division of HHS that is responsible for the administration and supervision of the Medicare program. For the purpose of administering Part A and Part B Medicare reimbursement claims, HHS contracts with private local insurance companies, known as " carriers " and " fiscal intermediaries, " to receive, review, and pay appropriate reimbursement claims related to services provided to Medicare beneficiaries. See 42U.S. C. § 1395u. 18. Medicare providers such as Defendants have a legal duty to familiarize themselves with Medicare's reimbursement rules, including those delineated in the Medicare Manuals. Heckler v. Cmty. Health Serv. of Crawford County, Inc ., 467U.S. 51, 64 - 65 (1984) . 19. To submit claims electronically, Medicare providers execute an Electronic Data Interchange Enrollment Form which contains several provisions including one that states: " anyone who misrepresents or falsifies or 0 PageID 8 causes to be misrepresented or falsified any record or other information relating to that claim that is required pursuant to this Agreement may, upon conviction, be subject to a fine and / or imprisonment under applicable Federal law. " Thus, under Medicare, it is illegal to provide and bill for medically unnecessary services and equipment. 20. Seeking payment for medically unnecessary services is an act designed to obtain reimbursement for a service that is not warranted by the patient's current and documented medical condition. See 42U.S. C. § 1395y (a) (1) (A) . 21. Inpatient Rehabilitation Services Rehabilitation therapies such as physical therapy, occupational therapy, and speech therapy are available to Medicare patients through several means. Medicare patients often receive rehabilitation therapies on an outpatient basis under the supervision of their primary care physicians — administered either at the Medicare patients ' homes through home health care providers, or at outpatient rehabilitation facilities. Medicare patients may also receive rehabilitation therapies as inpatients at acute care hospitals, and as residents of skilled nursing facilities. 0 PageID 9 22. For each of the above ways of obtaining rehabilitation therapy services, the cost to Medicare is less than when the patient is deemed to meet the requirements for admission to an IRF. When a patient can receive rehabilitative services in a less intensive setting, e. g ., on an outpatient basis, or in an acute care hospital or skilled nursing facility, Medicare does not authorize payment for treatment in an IRF. 23. Only for certain Medicare patients who require the intensive services provided by an IRF, and who satisfy other specific criteria discussed below, will Medicare pay for treatment in an IRF. 24. Medicare's " inpatient rehabilitation facility (IRF) benefit is designed to provide intensive rehabilitation therapy in a resource intensive inpatient hospital environment for patients who, due to the complexity of their nursing, medical management, and rehabilitation needs, require and can reasonably be expected to benefit from an inpatient stay and an interdisciplinary team approach to the delivery of rehabilitation care. " (Medicare Benefit Policy Manual, Pub. 100 - 02, Ch. 1 § 110 (2010) ("MBPM") (emphasis supplied) . Case 8: 16 - cv - 02956 - VMGJSS Document 1 Filed 10 / 18 / 16 - page 10 of 40 PagelD 10 Payment for IRF Services Medicare Part A provides payment for IRF services in 42 C. F. R. $ 412. 622. P See also MBPM $ 110. 26. At all times relevant hereto, the Defendants provided " inpatient hospital services, " as defined in Title 42 of the Code of Federal Regulations. See 42U.S. C. § 1395x (b) . 27. Medicare payment for most inpatient hospital services is based on a prospective payment system, under which the hospital receives a fixed payment regardless of the length of the patient's stay. Under the prospective payment system for IRFs ("IRF - PPS"), inpatient rehabilitation facilities receive a predetermined amount per discharge for inpatient services furnished to patients who are Medicare Part A fee - for - service beneficiaries. 42 C. F. R $ 412. 622 (a) (1) . 28. The payment to the IRF is payment in full for the services required by the patient. The Medicare program, and the Medicare beneficiaries who may become patients in an IRF, rely on the IRF and its staff to ensure that the Medicare patient Case 8: 16 - cv - 02956 - VIAGFJSS Document 1 Filed 10 / 18 / 16 - page 11 of 40 Pageld 11 is not admitted unless the patient meets the applicable Medicare criteria and, if admitted, receives all of the inpatient hospital rehabilitation services Medicare and the patient are paying for. While Medicare may reimburse the IRF a flat amount for the patient's stay based on the patient's diagnosis, the number of days over which a particular patient will receive rehabilitation services as an inpatient may vary, based upon the circumstances unique to the particular patient. Accordingly, the Medicare Program, and the Medicare beneficiaries who may become patients in an IRF, rely on the IRF and its staff to ensure that the Medicare patient is not prematurely discharged. 29. " Conditions for payment under the prospective payment system for inpatient rehabilitation facilities " are set forth in 42 CFR $ 412. 604. Medicare pays more for rehabilitative services performed in an IRF than it pays for rehabilitative services performed in other facilities, such as a skilled nursing facility. To warrant this higher amount, however, an IRF " must meet the conditions of this section (of the regulations) to receive payment " as an IRF. 42 CFR 412. 604 (a) (1) . If an IRF " fails to comply fully " with these conditions, the IRF may be reclassified as an inpatient hospital that is reimbursed at a lower rate. 42 CFR § 412. 604 (a) (2) . Case 8: 16 - CV - 02956 - VMJSS Document 1 Filed 10 / 18 / 16 - Rage 12 of 40 PageID 12 30. According to CMS, " [ t ] he IRF PPS payment for each patient is based on information found in the IRF - patient assessment instrument (PAI) . The IRF - PAI contains patient clinical, demographic, and other information and classifies the patient into distinct groups based on clinical characteristics and expected resource needs. Separate payments are calculated for each group, including the application of case and facility - level adjustments. " (Inpatient Rehabilitation Facility Prospective Payment System (September 2015) (https: / / www. cms. gov / Outreach and - Education / Medicare - Learning - Network MLN / MLNProducts / downloads / InpatRehabPaymtfctsht09 - 508. pdf) . Defendants ' " Discharge Fraud " Scheme 31. Defendants have devised and implemented a nationwide " Discharge Fraud Scheme " to defraud Medicare and Medicare patients in all six regions of the United States in which Defendants ' IRFs operate. Defendant HealthSouth tracks the success of this scheme statistically in reports which call out its regions that do not implement this scheme as successfully as others, as shown below. 32. Through this Discharge Fraud Scheme, Defendants (a) submit claims to and receive payment from Medicare for services not rendered; and (b) deprive patients 12 0 PageID 13 of the full amount of rehabilitation care that Medicare pays Defendants to provide under Medicare's IRF PPS system described above. 33. This scheme is based on a profit - driven protocol that Defendant HealthSouth has imposed on its IRFs, which deprives the patients of the full amount of rehabilitation care that Medicare pays Defendants to provide. The claims for IRF services are thus false and fraudulent as a result of this nationwide Discharge Fraud Scheme, directed by Defendant HealthSouth. 34. Under the IRF - PPS as described above, IRFs receive from Medicare a set payment for each patient, which is based in part on the Medicare average expected length of stay for patients with similar characteristics. IRF patients are assigned to Case Mix Groups (CMG) determined by Medicare, based in part on the IRF's representations about the patient's individual circumstances through the IRF - patient assessment instrument. 35. In turn, IRFs are required to provide whatever length of care a patient needs, based on an individualized case - by - case determination as the patient's treatment progresses. As such, some patients will require longer stays than the Medicare average expected length of stay, and some will 13 Case 8: 16 - cv - 02956 - V " GJSS Document 1 Filed 10 / 18 / 1 & page 14 of 40 Pageld 14 require shorter stays than the Medicare average expected length of stay, for the assigned CMG. 36. Defendants knowingly subvert this requirement of an individualized determination of the length of stay that each patient requires, based on the patient's specific progress and circumstances. Instead, Defendants treat the Medicare average expected length of stay as a starting point, which Defendants then arbitrarily " cut " or " shorten " by at least several days to arrive at a " discharge date, " which Defendants then use to carry out the scheme, as described below. 37. Defendants implement this Discharge Fraud Scheme as follows: very shortly after patients are admitted, Defendants provide patients a " discharge date " (a) that is unrelated to the patients ' functional gain during treatment, and (b) that is instead the figure that Defendants calculate by cutting several days from the Medicare average length of stay described above. The " discharge date " set by Defendants is based on the financial best interests of Defendants, rather than the best interests of the patients. 38. Defendants ' setting an arbitrary length of stay and discharge date through this Discharge Fraud Scheme has fundamental and profound consequences. It 14 Case 8: 16 - CV - 02956 - VNAG - JSS Document 1 Filed 10 / 18 / 16 - page 15 of 40 PageID 15 shows that Defendants are not entitled to payment under the IRF PPS, because Defendants are not making medical decisions based on the " interdisciplinary team approach to care " and other requirements for IRFs, but rather based on Defendants ' desire for greater profits. 39. Through communicating to patients this " discharge date, " Defendants communicate to patients, directly or impliedly, that this shortened length of stay is the benefit that Medicare is paying Defendants to provide. Defendants conceal the fraudulent nature of the " cut " or " shortened " length of stay by failing to disclose to patients that Medicare pays Defendants to provide the length of stay actually required by the patient, rather than this arbitrarily shortened length of stay that Defendants calculate internally to generate more profits. 40. Many Medicare patients lack the understanding to challenge Defendants ' resulting decisions to discharge them before they have received the required care and length of stay that Medicare is paying Defendants to provide. 41. For those patients who pursue appeals from these shortened lengths of stay, Defendants have determined that they will profit the most by simply taking the chance that Defendants will lose certain appeals, while pocketing the illicit profits 0 PageID 17 44. In fact, Relator Turnipseed has received employee discipline for failing to cut or shorten stays by at least three days, as directed by Defendants ' management, and for trying to stop these violations by Defendants. 45. To illustrate Defendants ' pressure on employees to fulfill this scheme, on July 8, 2016, Relator Turnipseed's supervisor directed Relator through a written " Performance Improvement Plan " to maintain " a LOS [ length of stay) that is 3 or more days below the RAND. " (Emphasis supplied) . (Defendants use the term " RAND " to refer to the Medicare average length of stay, based on a study by the RAND Corporation .) 46. Defendant Health South - Newnan's CEO has also instructed employees to cut the " RAND " (Medicare average length of stay) by three days, including Relator Turnipseed while she served as Director of Case Management. 47. Defendant HealthSouth systematically tracks the statistics showing the success of the Discharge Fraud Scheme in each of its regions in Defendants ' nationwide organization. Case 8: 16 - cv - 02956 - VIŅAO - JSS Document 1 Filed 10 / 18 / 16 Page 18 of 40 Pageld 18 48. For example, reprinted below is an excerpt from a Q1 2015 compilation of data by Defendant HealthSouth that lists and compares, for each of Defendants ' six regions, the Defendants ' average length of stay (as a result of its cutting or shortening of length of stay) with the " RAND " or Medicare average length of stay that underlies the IRF PPS: QI 2015 - MCR Only All HS Regions M ontluttua wwww lalar www Serose www way wewe SHANA WWWWW Mimi 00: 29 QI 2013 7600 30. 79 1. 5 33. 5 367 $ 71 321) UND RUNDE 1. 5 B5 850 556: 1 19 13. 16 1342 16. 1 306. 2 16 12. 3 19 369 S 0. 3 $ 1. 04. .:: 141. . . . . . . . MIDASLA. TIC SOLTHEAST SOLTHWEST: W ' EST CENTRAL. .:: 9696 701 76. 3°C 16. 04 75. 509 1063 11 10. 9 10. 04. 08 33. 0 00 W9 561 $ 4. 1. . . 10 L. . 0 U 330 130 59. 1 979 B D The above data assembled by Defendants evidences the Discharge Fraud Scheme by demonstrating how Defendants systematically have subverted the requirement that Medicare patients will receive the length of stay that they require, with some lengths of stay longer than the Medicare average length of stay, and some stays shorter than the Medicare average length of stay. This report by 18 0 PageID 19 Defendants is an admission that Defendants carefully monitor the effectiveness of their scheme to use the Medicare average length of stay (or RAND) as a starting point, and then arbitrarily to cut that figure by at least three days for the actual length of stay. 50. That Defendants ' actions were fraudulent is further evident from the timing of Defendants ' establishing and communicating to patients these precise, shortened " discharge dates " as described above: at or near their admission, and before therapists had even completed their assessments of the patients. 51. To illustrate by example patients whom Defendants subjected to their Discharge Fraud Scheme, " Patient A " was an 86 year - old female who was admitted to Defendants ' IRF on 9 / 14 / 16 for conditions including Congestive Heart Failure Exacerbation, Gait Impairment, and Abdominal Hematoma. The patient's mobility was impaired due to lower extremity edema / swelling. Two days after admission, on 9 / 16 / 16 the Director of Case Management notified the patient and her son that the length of stay was 7 days (as documented in the medical record), and communicated a " discharge date " of 9 / 21 / 16. The Medicare expected length of stay was in fact 15 days, more than twice the length of stay that Defendants had communicated to the patient only two days after her admission. The patient 0 PageID 20 W appealed, and the reviewer determined that the patient was " clinically unstable for a safe discharge home due to CHF exacerbation. " 52. Further demonstrating the national scope of the Discharge Fraud Scheme, the family of " Patient B " informed Relator Thomas that this patient was admitted to an IRF operated by Defendants in Texas in July 2016. According to the family, a HealthSouth therapist informed the patient and family on a Thursday that the patient was at 70 % of her functional goals. The following day, the patient was informed by Defendant's case manager that the patient must be discharged right away, and the patient was discharged the next day (a Saturday) to her independent living apartment, where the patient then suffered repeated falls. 53. The Defendants ' profit driven systematic discharge policies are contrary to, and prohibited by, Medicare's requirements that patient discharge decisions be based on the patients ' condition and rehabilitation progress and the Defendants ' insertion of protocols based on their corporate profit maximization interests is contrary to Medicare's fundamental requirements for a facility to qualify for higher IRF reimbursement. Accordingly, the Defendants knowing claims submissions based on their Medicare IRF status at any time during their ongoing discharge fraud scheme, were false and fraudulent. Case 8: 16 - CV - 02956 - V ^ G - JSS Document 1 Filed 10 / 18 / 16 Page 21 of 40 PageID 21 Defendants ' " Admission Fraud " Scheme: The Limited Circumstances When IRF Care is Covered by Medicare Under The " Reasonable and Necessary " Criteria 54. As IRF providers know from CMS Guidance, " IRF care is only considered by Medicare to be reasonable and necessary. . . if the patient meets all of the requirements outlined in 42 CFR $ 8412. 622 (a) (3), (4), and (5), as interpreted in this section. . . . Medicare requires determinations of whether IRF stays are reasonable and necessary to be based on an assessment of each beneficiary's individual care needs. " (Id .) (emphasis supplied) . 55. Federal regulations require that a patient must meet certain criteria for admission before an IRF may receive payment from Medicare, pursuant to 42 C. F. R $ 412. 622 (a) (3), which sets forth the " IRF coverage criteria ": (3) IRF coverage criteria. In order for an IRF claim to be considered reasonable and necessary under section 1862 (a) (1) of the Act, there must be a reasonable expectation that the patient meets all of the following requirements at the time of the patient's admission to the IRF (i) Requires the active and ongoing therapeutic intervention of multiple therapy disciplines (physical therapy, occupational therapy, speech - language pathology, or prosthetics / orthotics therapy), one of which must be physical or occupational therapy. Case 8: 16 - cv - 02956 - VIŅAG - JSS Document 1 Filed 10 / 18 / 16 Page 22 of 40 PageID 22 (ii) Generally requires and can reasonably be expected to actively participate in, and benefit from, an intensive rehabilitation therapy program. Under current industry standards, this intensive rehabilitation therapy program generally consists of at least 3 hours of therapy (physical therapy, occupational therapy, speech - language pathology, or prosthetics / orthotics therapy) per day at least 5 days per week. In certain well - documented cases, this intensive rehabilitation therapy program might instead consist of at least 15 hours of intensive rehabilitation therapy within a 7 consecutive day period, beginning with the date of admission to the IRF. Benefit from this intensive rehabilitation therapy program is demonstrated by measurable improvement that will be of practical value to the patient in improving the patient's functional capacity or adaptation to impairments. The required therapy treatments must begin within 36 hours from midnight of the day of admission to the IRF. (iii) Is sufficiently stable at the time of admission to the IRF to be able to actively participate in the intensive rehabilitation therapy program that is described in paragraph (a) (3) (ii) of this section. (iv) Requires physician supervision by a rehabilitation physician, defined as a licensed physician with specialized training and experience in inpatient rehabilitation. The requirement for medical supervision means that the rehabilitation physician must conduct face - to - face visits with the patient at least 3 days per week throughout the patient's stay in the IRF to assess the patient both medically and functionally, as well as to modify the course of treatment as needed to maximize the patient's capacity to benefit from the rehabilitation process. 42 C. F. R $ 412. 622 (a) (3) (emphasis supplied) . 22 0 PageID 23 56. CMS has provided additional guidance on the " medical necessity criteria " in the MPBM, as follows: In order for IRF care to be considered reasonable and necessary, the documentation in the patient's IRF medical record (which must include the preadmission screening described in section 110. 1. 1, the post - admission physician evaluation described in section 110. 1. 2, the overall plan of care described in section 110. 1. 3, and the admission orders described in section 110. 1. 4) must demonstrate a reasonable expectation that the following criteria were met at the time of admission to the IRF: 1. The patient must require the active and ongoing therapeutic intervention of multiple therapy disciplines (physical therapy, occupational therapy, speech - language pathology, or prosthetics / orthotics), one of which must be physical or occupational therapy. 2. The patient must generally require an intensive rehabilitation therapy program, as defined in section 110. 2. 2. Under current industry standards, this intensive rehabilitation therapy program generally consists of at least 3 hours of therapy per day at least 5 days per week. In certain well documented cases, this intensive rehabilitation therapy program might instead consist of at least 15 hours of intensive rehabilitation therapy within a 7 consecutive day period, beginning with the date of admission to the IRF. 3. The patient must reasonably be expected to actively participate in, and benefit significantly from, the intensive rehabilitation therapy program that is defined in section 110. 2. 2 at the time of admission to the IRF. The patient can only be expected to benefit significantly from the intensive rehabilitation therapy program if the patient's condition and functional status are such that the patient can reasonably be 23 0 PageID 24 expected to make measurable improvement (that will be of practical value to improve the patient's functional capacity or adaptation to impairments) as a result of the rehabilitation treatment, as defined in section 110. 3, and if such improvement can be expected to be made within a prescribed period of time. The patient need not be expected to achieve complete independence in the domain of self - care nor be expected to return to his or her prior level of functioning in order to meet this standard. 4. The patient must require physician supervision by a rehabilitation physician, defined as a licensed physician with specialized training and experience in inpatient rehabilitation. The requirement for medical supervision means that the rehabilitation physician must conduct face - to - face visits with the patient at least 3 days per week throughout the patient's stay in the IRF to assess the patient both medically and functionally, as well as to modify the course of treatment as needed to maximize the patient's capacity to benefit from the rehabilitation process. 5. The patient must require an intensive and coordinated interdisciplinary approach to providing rehabilitation, as defined in section 110. 2. 5. (MBPM 110. 2) (emphasis supplied) . 57. CMS has provided further guidance on the " reasonable and necessary criteria " for IRF discharges after January 1, 2010: Reasonable and Necessary Criteria The following coverage requirements, which determine whether individual IRF claims are for reasonable and necessary services under Section 1862 (a) (1) of the Act, are effective for discharges that occur on or after January 1, 2010: 24 Case 8: 16 - cv - 02956 - V " G - JSS Document 1 Filed 10 / 18 / 16 Page 25 of 40 PagelD 25 Specify a preadmission assessment that a rehabilitation physician reviewed and approved prior to IRF admission; Require a post - admission physician evaluation to verify that the patient's preadmission assessment information remains unchanged or to document any changes; Specify requirements for an individualized overall plan of care for each patient; Emphasize the interdisciplinary approach to care provided in IRFs and require interdisciplinary team meetings at least once per week throughout the IRF stay; and Clarify the requirements for admission to an IRF by specifying that a patient must: Require the active and ongoing therapeutic intervention of multiple therapy disciplines; Generally require an intensive rehabilitation therapy program uniquely provided in IRFs; Be sufficiently medically stable to benefit from IRF services; Require close medical supervision by a physician for managing medical conditions to support participation in an intensive rehabilitation therapy program; and Require an intensive and coordinated interdisciplinary approach to care. (Inpatient Rehabilitation Facility Prospective Payment System (September 2015) (https: / / www. cms. gov / Outreach - and - Education / Medicare - Learning - Network YYYY MLN / MLNProducts / downloads / InpatRehabPaymtfctsht09 - 508. pdf 0 PageID 26 58. In addition to the " reasonable and necessary " criteria addressed above, to ensure that the IRF care is reasonable and necessary, IRFs must fulfill the " documentation " requirements specified in 42 CFR § 412. 622 (a) (4) and (5) . 59. Pursuant to 42 CFR § 412. 622 (a) (4), effective for discharges since January 1, 2010, IRFs are not entitled to payment by Medicare unless they " document that each patient for whom the IRF seeks payment is reasonably expected to meet all of the requirements in paragraph (a) (3) of this section at the time of admission. " 42 CFR § 412. 622 (a) (4) . (Emphasis supplied) . 60. Pursuant to section 412. 622 (a) (4), as quoted below, the patient's medical record at the IRF must include (1) a comprehensive preadmission screening, (2) a postadmission rehabilitation physician evaluation, and (3) an individualized overall plan of care developed by a rehabilitation physician: (4) Documentation. To document that each patient for whom the IRF seeks payment is reasonably expected to meet all of the requirements in paragraph (a) (3) of this section at the time of admission, the patient's medical record at the IRF must contain the following documentation (i) A comprehensive preadmission screening that meets all of the following requirements, 26 0 PageID 27 (A) It is conducted by a licensed or certified clinician (s) designated by a rehabilitation physician described in paragraph (a) (3) (iv) of this section within the 48 hours immediately preceding the IRF admission. A preadmission screening that includes all of the required elements, but that is conducted more than 48 hours immediately preceding the IRF admission, will be accepted as long as an update is conducted in person or by telephone to update the patient's medical and functional status within the 48 hours immediately preceding the IRF admission and is documented in the patient's medical record. (B) It includes a detailed and comprehensive review of each patient's condition and medical history. (C) It serves as the basis for the initial determination of whether or not the patient meets the requirements for an IRF admission to be considered reasonable and necessary in paragraph (a) (3) of this section. (D) It is used to inform a rehabilitation physician who reviews and documents his or her concurrence with the findings and results of the preadmission screening. (E) It is retained in the patient's medical record at the IRF. (ii) A post - admission physician evaluation that meets all of the following requirements, (A) It is completed by a rehabilitation physician within 24 hours of the patient's admission to the IRF. (B) It documents the patient's status on admission to the IRF, includes a comparison with the information noted in the preadmission screening documentation, and serves as the basis for the development of the overall individualized plan of care. 0 PagelD 28 (C) It is retained in the patient's medical record at the IRF. (iii) An individualized overall plan of care for the patient that meets all of the following requirements (A) It is developed by a rehabilitation physician, as defined in paragraph (a) (3) (iv) of this section, with input from the interdisciplinary team within 4 days of the patient's admission to the IRF. (B) It is retained in the patient's medical record at the IRF. (5) Interdisciplinary team approach to care. In order for an IRF claim to be considered reasonable and necessary under section 1862 (a) (1) of the Act, the patient must require an interdisciplinary team approach to care, as evidenced by documentation in the patient's medical record of weekly interdisciplinary team meetings that meet all of the following requirements, (A) The team meetings are led by a rehabilitation physician as defined in paragraph (a) (3) (iv) of this section, and further consist of a registered nurse with specialized training or experience in rehabilitation; a social worker or case manager (or both); and a licensed or certified therapist from each therapy discipline involved in treating the patient. All team members must have current knowledge of the patient's medical and functional status. (B) The team meetings occur at least once per week throughout the duration of the patient's stay to implement appropriate treatment services; review the patient's progress toward stated rehabilitation goals; identify any problems that could impede progress towards those goals; and, where necessary, reassess previously established goals in light of impediments, revise the treatment plan in light of new goals, and monitor continued progress toward those goals. 28 0 PageID 29 (C) The results and findings of the team meetings, and the concurrence by the rehabilitation physician with those results and findings, are retained in the patient's medical record. 42 CFR $ 412. 622 (a) (4) . 61. The mandatory requirements for IRF payment include those in section 412. 622 (a) (5), which provides that the patient also must require an " interdisciplinary team approach to care, " with specified documentation supporting that finding: (5) Interdisciplinary team approach to care. In order for an IRF claim to be considered reasonable and necessary under section 1862 (a) (1) of the Act, the patient must require an interdisciplinary team approach to care, as evidenced by documentation in the patient's medical record of weekly interdisciplinary team meetings that meet all of the following requirements (A) The team meetings are led by a rehabilitation physician as defined in paragraph (a) (3) (iv) of this section, and further consist of a registered nurse with specialized training or experience in rehabilitation; a social worker or case manager (or both); and a licensed or certified therapist from each therapy discipline involved in treating the patient. All team members must have current knowledge of the patient's medical and functional status. (B) The team meetings occur at least once per week throughout the duration of the patient's stay to implement appropriate treatment services; review the patient's progress toward stated rehabilitation goals; identify any problems that could impede progress towards those goals; and, where necessary, reassess previously established goals in light of impediments, revise the treatment plan in light of new goals, and monitor continued progress toward those goals. (C) The results and findings of the team meetings, and the concurrence by 29 0 Pageld 30 the rehabilitation physician with those results and findings, are retained in the patient's medical record. 42 CFR § 412. 622 (a) (5) . 62. To increase their revenues, Defendants knowingly, systematically, and wrongfully admit patients who are not eligible for admission to an IRF under Medicare criteria set forth above. As set forth below, Defendants nonetheless submit or cause to be submitted claims for payment, and receive payment under the IRF prospective payment system for these patients, to which Defendants are not entitled. Based on Relators ' experience in Defendants ' organization, communications from superiors, and knowledge of corporate practices, it was a corporate - wide practice of Defendant HealthSouth to have its IRF facilities in the United States knowingly admit patients who did not meet the criteria for admission to an IRF with payment by Medicare. 64. As illustrated by the sample patients cited as examples below, Defendants have knowingly and systematically admitted patients who did not meet the legal requirements for the IRF benefit at the time of admission. 30 0 PageID 31 65. To illustrate, " Patient C " was a 79 year old female seen in the emergency department at a nearby acute care hospital on 5 / 27 / 16 reporting a fall while living at home. The physician at the acute care hospital sent her home, thus not finding that she required the close medical management needed for admission. Six days later on 6 / 2 / 16, Defendant nonetheless admitted her to its IRF for 12 days with a primary diagnosis of " myopathy " (a common diagnosis that Defendants use to try to justify admission) and " gait impaired loss of confidence. " The discharge summary dictated by the physician at the defendant IRF stated in part, " medically, no major complication, " which evidences that there was not the medical complexity that would justify admission to the defendant facility, or that she " require [ d ] physician supervision by a rehabilitation physician. . ., " as required by 42 C. F. R 8 412. 622 (a) (3) . Thus, based on Defendant's documentation, this patient could have had her care coordinated by her primary care physician at a lower level of care such as through outpatient or home health therapy; and thus Defendant failed to " document that each patient for whom the IRF seeks payment is reasonably expected to meet all of the requirements in paragraph (a) (3) of this section at the time of admission. " 42 CFR § 412. 622 (a) (4) . (Emphasis supplied) . 31 0 PageID 32 66. As another example, " Patient D " was an 87 year old female who was living in an assisted living facility and was independent in all ADLs. After suffering a ground level fall on 5 / 27 / 16, she was evaluated at a nearby acute care hospital and returned home to the assisted living facility. Her past medical history included stroke, but there is no documentation of a recent stroke. On 6 / 2 / 16, after apparent additional falls, the patient went on to spend 19 days at Defendant's IRF with a diagnosis of " late effects of stroke, " then returned to her Assisted Living Facility with home health organized services. A length of stay / CMG of 19 days is consistent with a newly diagnosed stroke, which she did not have, not ground level falls. The patient did have some improvements in her level of function, but the discharge summary by the physician at Defendant's IRF noted no major medical complications during her stay. In short, this patient utilized 19 days of her hospital benefit for monitoring that she could have received under the care of her primary care physician, rather than be admitted to the IRF; and due to her advanced age and other medical conditions, this patient may well need those 19 days in the future for appropriate hospital care. Instead of the IRF, with the care of the organized home health service of nursing and therapy, and with the level of supervision and support already provided in the Assisted Living Facility, the 19 day stay at Defendant's IRF under the patient's Medicare Part A would have been averted. Defendant's 32 0 Pageld 33 required documentation failed to show the medical complexity that would justify admission to the defendant facility, or that she " require [ d ] physician supervision by a rehabilitation physician. . ., " as required by 42 C. F. R 8 412. 622 (a) (3) . 67. As another example, " Patient E " was a 78 year old female whose spouse had died several months earlier. This patient was admitted to an acute care hospital on 9 / 10 / 16 and evaluated for vertigo, nausea, vomiting and near falls. On 9 / 14 / 16, Defendant admitted her to its IRF with diagnoses including Benign Paroxsymal Positional Vertigo, Gait Impairment and Bereavement. The stated reasons for IRF admission included " to prevent complications from probable fall " requiring close medical management and intensive functional recovery program. The History and Physical also addressed the bereavement with continued encouragement of the patient, making the medical option available if she should " descend into depression, " as it had been five months since her spouse's death. Defendant's required documentation failed to show the medical complexity that would justify admission to the defendant facility, or that she " require [ d ] physician supervision by a rehabilitation physician. . ., " as required by 42 C. F. R 8 412. 622 (a) (3) . While the loss of a loved one can be devastating, this IRF had no psychologist on staff, and outpatient psychologists, counselors programs and support groups are equipped to help bereaved patients. Further, there are also many effective 33 0 Pageld 34 outpatient therapy programs with a vestibular physical therapy focus that could also address vertigo and problems with balance. 68. Defendants knowingly submitted and / or caused to be submitted claims for payment by Medicare for a significant number of patients such as the patients described above, who were not eligible for admission under the IRF admission criteria established by Medicare. Anti - Kickback Statute 69. Additionally, Defendants ' practice of systematically admitting patients who do not meet the criteria for admission to IRFs undermines the integrity of the essential collaboration and communication between and among discharge planners at acute care hospitals, home health agencies, and medical directors at the IRFs. 70. Defendants ' systematic admission of non - qualified patients removes an important check and balance that is intended to protect Medicare funds and ensure that only appropriate patients are admitted. Defendants ' practices may in fact induce referrals and provide financial benefits for referring hospitals, home health agencies, and medical directors that constitute illegal remuneration in violation of 34 0 PageID 35 42U.S. C § 1320a - 7b, causing the impacted Medicare claims to be false claims in violation of the False Claims Act. The 60 Percent Rule 71. To receive payment under the IRF PPS, Defendants must satisfy the " 60 Percent Rule " under the " Classification Criterion " set forth by CMS, as follows: Classification Criterion To be excluded from the Acute Care Hospital Inpatient PPS specified in 42 CFR 412. 1 (a) (1) and instead be paid under the IRF PPS, an inpatient rehabilitation hospital or rehabilitation unit of an acute care hospital (or CAH) must meet the requirements for classification as an IRF stipulated in Subpart B of 42 CFR Part 412. One criterion specified at 42 CFR 412. 29 (b) Medicare uses for classifying a hospital or unit of a hospital as an IRF is that a minimum percentage of a facility's total inpatient population must require treatment in an IRF for one or more of 13 medical conditions listed in 42 CFR 412. 29 (b) (2) . This minimum percentage is known as the compliance threshold. The compliance threshold was 75 percent prior to the Centers for Medicare & Medicaid Services (CMS) issuing a final rule on May 7, 2004, which revised the classification criteria. The regulatory requirement was commonly referred to as the 75 percent rule. Beginning July 1, 2006, the Medicare, Medicaid, and State Children's Health Insurance Program (SCHIP) Extension Act of 2007 (Public Law 110 - 173) stipulated that the compliance threshold should be set no higher than 60 percent. Thus, we now refer to this regulatory requirement as the 60 percent rule. The Medicare, Medicaid, and SCHIP Extension Act of 2007 also stipulated IRFs must continue to use comorbidities that meet certain criteria as specified in 42 CFR 412. 29 (b) (1) to determine the compliance threshold, as they have been since the May 7, 2004, final rule. 5 0 PageID 36 The 13 medical conditions that qualify for the 60 percent rule, as specified in the May 7, 2004, final rule, are: 1. Stroke; 2. Spinal cord injury; 3. Congenital deformity; 4. Amputation; 5. Major multiple trauma; 6. Fracture of femur (hip fracture); 7. Brain injury; 8. Neurological disorders, including: Multiple sclerosis; Motor neuron diseases; Polyneuropathy; Muscular dystrophy; and Parkinson's disease; 9. Burns; For the three qualifying conditions listed below, the severity / complexity can vary significantly. For this reason, additional clinical criteria were established to require evidence that other less intensive treatments were attempted and failed to improve the patient's condition before admission to the IRF; 10. Active polyarticular rheumatoid arthritis, psoriatic arthritis, and seronegative arthropathies resulting in significant functional impairment of ambulation and other activities of daily living; 11. Systemic vasculidities with joint inflammation resulting in significant functional impairment of ambulation and other activities of daily living; 12. Severe or advanced osteoarthritis (osteoarthrosis or degenerative joint disease) involving two or more weight bearing joints (elbow, shoulders, hips, or knees but not counting a joint with a prosthesis) with joint deformity and substantial loss of range of motion, atrophy of muscles surrounding the joint, and significant functional impairment of ambulation and other activities of daily living; and 36 0 PageID 37 For the final qualifying condition, the following patient characteristics were identified, which add complexity in a way that is likely to require an IRF level of care: 13. Knee or hip joint replacement, or both, during an acute care hospitalization immediately preceding the inpatient rehabilitation stay and also meets one or more of the following specific criteria: • The patient underwent bilateral knee or bilateral hip joint replacement surgery during the acute care hospital admission immediately preceding the IRF admission; • The patient is extremely obese with a Body Mass Index of at least 50 at the time of admission to the IRF; or • The patient is age 85 or older at the time of admission to the IRF 72. To the extent Defendants ' IRFs violated the " 60 Percent Rule " described above, such that the " percentage of a facility's total inpatient population must require treatment in an IRF for one or more of 13 medical conditions listed in 42 CFR 412. 29 (b) (2) " was less than 60 percent, Defendants ' IRFs in question did not qualify for payment under the IRF - PPS. COUNT I FEDERAL FALSE CLAIMS ACT 73. The allegations in the preceding paragraphs are incorporated by reference. 37 0 PageID 38 74. Defendants violated the Federal False Claims Act in that they: (1) knowingly presented or caused to be presented numerous false claims for payment or approval in violation of 31U.S. C. $ 3729 (a) (1), as amended October 27, 1986, and 31U.S. C. $ 3729 (a) (1) (A), as amended May 20, 2009; (2) knowingly made, used, or caused to be made or used false records or statements material to false or fraudulent claims, in violation of 31U.S. C. § 3729 (a) (2), as amended October 27, 1986, and 31U.S. C. § 3729 (a) (1) (B), as amended May 20, 2009; (3) knowingly made, used, or caused to be made or used, false records or statements material to an obligation to pay or transmit money or property to the Government, or to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government; and (4) knowingly concealed or knowingly and improperly avoided or decreased an obligation to pay or transmit money or property to the Government, in violation of 31U.S. C. § 3729 (a) (7), as amended October 27, 1986, and 31U.S. C. $ 3729 (a) (1) (G), as amended May 20, 2009. 75. As a result of Defendants ' violations of 31U.S. C. § 3729, the United States has suffered damages in an amount to be determined at trial. 38 0 PageID 39 WHEREFORE, Relators, on behalf of themselves and the United States, pray: (a) That the Court enter judgment against Defendants in an amount equal to three times the amount of damages the United States has sustained because of Defendants ' actions, plus a civil penalty of between $ 5, 500 and $ 11, 000 for each violation of the Federal False Claims Act before November 2, 2015, and $ 10, 781 to $ 21, 563 for each violation after November 2, 2015; (b) That Relator be awarded an amount that the Court decides is reasonable for collecting the civil penalty and damages, which shall be at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim if the government intervenes, and not less than 25 percent nor more than 30 percent of the proceeds of the action or settlement of the claim if the government does not intervene; (c) That Relator be awarded all costs and expenses incurred, including reasonable attorneys ' fees; and (d) That the Court order such other relief as is appropriate. Trial by jury is hereby requested. SIGNATURE PAGE TO FOLLOW 0 PageID 40 Respectfully submitted, James A. Gustino, P. A. - TRIAL COUNSEL Florida Bar No. 612499 P. O. Box 784959 Winter Garden, Florida 34778 - 4959 (407) 625 - 6700 jgustino @ gustinolaw. com Michael A. Sullivan, Esq. Finch McCranie, LLP 225 Peachtree Street. NE 1700 South Tower Atlanta, Georgia 30303 (404) 658 - 9070 (404) 688 - 0649 (fax) msullivan @ finchmccranie. com James J. Breen Florida Bar No. 297178 The Breen Law Firm, PA 5755 North Point Parkway Suite 260 Alpharetta, Georgia 30022 (678) 735 - 5052 jbreen @ breenlaw. com Attorneys for Plaintiff - Relators