HealthSouth will pay $14.2 million, and the two doctors have agreed to pay $700,000 total under separate settlement agreements,

Peanuts , once again, for the 'SETTLEMENT"
Now, where does this money go?


HealthSouth, two doctors settle federal claims
Posted by VAL WALTON / News staff writer
December 15, 2007 7:30 AM

HealthSouth Corp. and orthopedic surgeons Larry Lemak and Jim Andrews have agreed to pay a total of $14.9 million to settle health care fraud claims, authorities announced Friday.
HealthSouth will pay $14.2 million, and the two doctors have agreed to pay $700,000 total under separate settlement agreements, according to a statement released by the U.S. attorney's office in Birmingham.
Prosecutors said the settlement stems from allegations the Birmingham-based company submitted false Medicaid and Medicare claims to the government and paid kickbacks to doctors who referred patients for care in some of its hospitals, outpatient rehabilitation clinics and ambulatory surgery centers. The government contended the doctors were paid more than fair market value as medical directors while making the referrals. John T. Brennan of Washington, an attorney for Lemak, on Friday said Lemak's settlement involved civil claims, not kickbacks. Lemak agreed to pay $250,000 to resolve the claims, Brennan said.
Efforts to reach Andrews were unsuccessful Friday. His spokesman, Lanier Johnson, said Andrews was traveling out of the country. Andrews' settlement amount is $450,000, according to prosecutors.
The Justice Department said the settlement resolves issues involving claims HealthSouth made to Medicare and Medicaid for services provided to patients referred by Andrews and Lemak when HealthSouth had financial relationships with the doctors; their former partnership, the Alabama Sports Medicine & Orthopaedic Center; and their foundation, the American Sports Medicine Institute.
The actions, government lawyers said, violated the Medicare and Medicaid Anti-Kickback Statute and a provision of the Social Security Act known as the Stark law. The wide-ranging law prohibits physicians from making referrals for a "designated health service," payable by Medicare or Medicaid, to any entity with which the physicians have a financial relationship.
In a statement Friday, HealthSouth said the settlement resolves issues associated with various practices under the company's previous management team that were discovered and disclosed by new management more than two years ago.
HealthSouth's co-founder and former chief executive, Richard Scrushy, was ousted in 2003 after the FBI raided the headquarters and prosecutors accused him in a $2.7 billion accounting fraud.
The company, which is the nation's largest provider of inpatient rehabilitation services, operating in 26 states and Puerto Rico, said the $14.2 million settlement amount was disclosed earlier, in the company's third-quarter financial statement.
"The new HealthSouth is dedicated to a corporate culture characterized by integrity, quality and compliance - and supporting our employees in their ongoing efforts to provide high-quality care to patients across the country while providing the best return for our shareholders," said HealthSouth President and Chief Executive Officer Jay Grinney.
Prosecutors said the HealthSouth settlement also ends allegations the company paid kickbacks to and entered into improper financial relationships with other doctors, including a group of physicians in Los Angeles, in an attempt to induce patient referrals. The government's investigation of other doctors continues.
Thomas P. O'Brien, U.S. attorney for California's central district, said Medicare providers seeking federal funds must play by the rules.
"Providing sweet deals to physicians groups to ensure a steady stream of referrals runs afoul of those rules and will not be tolerated," O'Brien said in a statement.
Jeffrey S. Bucholtz, acting assistant attorney general for the Justice Department's Civil Division, said in a statement that hidden financial agreements between health care providers and physicians may influence where patients receive treatment and what treatment is received.
"Medicare beneficiaries deserve their physicians' unbiased judgment regarding their treatment, free of improper financial influences," Bucholtz said.
Brennan, Lemak's attorney, said the allegations made against his client covered the period from Jan. 1 to June 30, 2003. Lemak, like HealthSouth, went to the government in 2005 about the issue.
"This is a matter he wanted to resolve and put behind him," Brennan said.
Andrews and Lemak founded Alabama Sports Medicine & Orthopaedic Center in 1986 at HealthSouth Medical Center. With Scrushy's help, they grew it into a world-renowned enterprise for orthopedic care of athletes and dignitaries. Their association with HealthSouth hit a rocky patch after the accounting scandal erupted in March 2003 and Scrushy was fired.
The two moved their practice to St. Vincent's Birmingham in May 2005. Since then, they have been dissolving their alliance. Andrews is staying at St. Vincent's but Lemak is not and has started doing more surgeries at Brookwood Medical Center.
News staff writer Anna Velasco contributed to this report vwalton@bhamnews.com