Healthsouth and Doctors Settle Claims

Dan Frith

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Healthsouth Corp. and two Alabama doctors have settled a civil lawsuit brought by the Justice Department. The doctors and Healthsouth jointly agreed to pay $15 million to settle claims by the government of a kickback scheme.

Dr. James Andrews and Dr. Larry Lemak are paying $700,000 of the settlement and Healthsouth is paying the remainder. The settlement involved claims made by Healthsouth to Medicare and Medicaid for services provided to patients referred by the doctors - when the company had a financial relationship with the doctors. The government alleged the doctors were given the title of medical directors at Healthsouth, along with extra pay, in return for the doctors' agreement to refer patients back to Healthsouth facilities. This activity was in violation of a federal law known as the Stark Anti-Kickback statute.

Of course, Healthsouth and the doctors denied participating in a prohibited kickback relationship.