EXHIBIT 10.3
ADMINISTRATIVE SETTLEMENT AGREEMENT
I. Parties
This Administrative Settlement Agreement ("Agreement") dated December 30, 2004,
is entered into between the United States Department of Health and Human
Services acting through the Centers for Medicare & Medicaid Services and its
officers and agents, including, but not limited to, its fiscal intermediaries,
and HealthSouth Corporation, (hereafter the "Parties").
II. Definitions
"HHS" means the United States Department of Health and Human Services, acting
through the Centers for Medicare & Medicaid Services (CMS) and its officers and
agents, including, but not limited to, its fiscal intermediaries (FI's).
"HealthSouth" means HealthSouth Corporation, a Delaware corporation, and
includes its predecessors, current and former subsidiaries, divisions,
affiliates, and the corporation acting in its capacity as a joint venture
participant or its capacity as an owner.
"HealthSouth Provider" shall mean a hospital, skilled nursing facility,
comprehensive outpatient rehabilitation facility, outpatient rehabilitation
facility, inpatient rehabilitation facility or home health agency that is or
was, owned by HealthSouth, or by any entity owned directly or indirectly at
least 50 percent by HealthSouth, on or before December 31, 2003, and that
submitted or could have submitted Medicare cost reports for cost reporting
periods ending on or before December 31, 2003.
"HealthSouth Covered Cost Reports" collectively are defined as: any cost
statements or cost reports which have, or could have been submitted to CMS or
its FIs by HealthSouth or any HealthSouth Provider for cost reporting periods
ending on or before December 31, 2003.
"Department of Justice Settlement Agreement" means the settlement agreement
entered into on December 30, 2004 among and between the United States, acting
through the United States Department of Justice, the Office of Inspector
General ("OIG") of HHS, the Department of Labor, the TRICARE Management
Activity ("TMA"), Xxxxx Xxxxxx, XxXxxxx Xxxxxxx, Xxxx Xxxxx, Xxxx Xxxxxxx,
Xxxxxxxxxx & Associates and Xxxxxxx Xxxxxxx, and HealthSouth contemporaneous
with the Administrative Settlement Agreement.
"Excluded Matters" collectively are those matters not covered under the
Agreement and constitute the following four (4) matters: (1) xxxxxxxx to
Medicare by HealthSouth inpatient facilities and suppliers of Durable Medical
Equipment Prosthetics and Orthotics for orthotics and prosthetics provided to
inpatients at HealthSouth facilities; (2) any conduct other than the Covered
Conduct in the Department of Justice Settlement Agreement that is the subject
of False Claims Act, fraud, Medicare and Medicaid Anti-Kickback Act or Xxxxx
Law claims; (3) self-disclosures by HealthSouth to the OIG of HHS dated
November 25, 2003, April 12, 2004, June 25, 2004 and October 5, 2004, and (4)
self-disclosures made by HealthSouth to the OIG of HHS after October 5, 2004.
"Effective Date" means the date of execution by the last Party that signs the
Agreement.
In consideration of the mutual agreements and promises hereinafter set forth,
the sufficiency and adequacy of which are hereby acknowledged, the Parties
hereto agree and covenant as follows:
III. Terms and Conditions
1. Contingent upon HealthSouth fully performing the required actions set forth
in paragraphs 3, 8 and 9 of the Agreement, HHS will hereby release and
discharge HealthSouth and all HealthSouth Providers from any obligations
related to the HealthSouth Covered Cost Reports except as to the Excluded
Matters.
2. Contingent upon HealthSouth fully performing the required actions set forth
in paragraphs 3, 8 and 9 of the Agreement, all HealthSouth Covered Cost Reports
shall be closed and considered final settled, except as to the Excluded
Matters. HHS shall not pursue HealthSouth Covered Cost Report obligations,
except as to the Excluded Matters, through any means including: by audit,
adjustment, review or an administrative or judicial challenge.
3. As of the Effective Date of the Agreement, HealthSouth and all HealthSouth
Providers hereby release HHS from any liability in connection with HealthSouth
Covered Cost Reports including any pending or future administrative appeals and
federal court cases (collectively, the "Appeals") arising from HealthSouth
Covered Cost Reports. HealthSouth and all HealthSouth Providers shall not file
any further Appeals with respect to the HealthSouth Covered Cost Reports, and
within thirty (30) days of the Effective Date of the Agreement, HealthSouth and
all HealthSouth Providers shall move to withdraw any Appeals with prejudice.
These Appeals include, but are not limited to, the San Diego appeal
(Continental Rehabilitation Hospital of San Diego v. Mutual of Omaha Insurance
Co., PRRB Case No. 03-0700). HealthSouth must secure the consent of any entity
necessary to withdraw all Appeals, including but not limited to, Continental
Rehabilitation Hospital of San Diego. HealthSouth and all HealthSouth Providers
agree not to institute any administrative appeals or federal district court
action seeking further reimbursement from HHS, under any theory known or
unknown, related to the HealthSouth Covered Cost Reports.
4. As of the Effective Date of the Agreement, HealthSouth and all HealthSouth
Providers hereby release HHS from making any further payments (relating to, but
not limited to, tentative settlements, Notices of Program Reimbursement
("NPRs") or reopenings of cost reports), credits or remuneration to HealthSouth
and any HealthSouth Providers for any HealthSouth Covered Cost Reports; nor
will HealthSouth and any HealthSouth Providers seek any further payments
(relating to, but not limited to, tentative settlements, NPRs or reopenings of
cost reports), credits or remuneration for any HealthSouth Covered Cost
Reports.
5. As of the Effective Date of the Agreement, HealthSouth and all HealthSouth
Providers shall not seek to reopen any HealthSouth Covered Cost Reports.
HealthSouth and all HealthSouth Providers agree not to contest the reopening of
any cost reports by HHS related to the Excluded Matters. HealthSouth and all
HealthSouth Providers shall not file original or amended home office cost
statements or cost reports related to HealthSouth Covered Cost Reports.
6. Notwithstanding this or any other provision of the Agreement, HHS reserves
the right to reopen the HealthSouth Covered Cost Reports in order to comply
with any act of Congress requiring HHS to rely on settled cost reports for such
year(s) as a basis for adjusting Federal payment rates to Medicare providers.
HHS will not use any such reopening either to pay any additional amounts to or
seek further payments from HealthSouth and any HealthSouth Providers for the
reopened cost reporting period(s).
7. Notwithstanding this or any other provision of the Agreement, HHS retains
the right to review and adjust any data and statistics set forth in any
HealthSouth Covered Cost Reports for computing future reimbursement amounts
that are dependent on the settlement of prior cost reports
8. Notwithstanding any other provision of the Agreement, HealthSouth will
develop a methodology to determine the amount of unallowable costs included in
all HealthSouth Covered Cost Reports. Unallowable costs are described in
paragraph III(S) of the Department of Justice Settlement Agreement. HealthSouth
will submit supporting documentation for their methodology and the estimated
amount of unallowable costs to HHS within sixty (60) days of the execution of
the Agreement. HHS reserves the right to review or audit the methodology and
supporting documentation related to the estimated amount of unallowable costs.
Within sixty (60) days of HealthSouth's submission of the items identified
above, HHS will provide HealthSouth with written notice as to whether the
methodology and estimate of unallowable costs are acceptable. When HHS has
determined that the estimated amount of unallowable costs due from HealthSouth
is acceptable, then HealthSouth has fourteen (14) days to pay this amount to
HHS via electronic funds transfer ("EFT"). HealthSouth agrees to separately
identify unallowable costs in a non-reimbursable cost center on all cost
reports or home office cost statements submitted for cost reporting periods
ending after December 31, 2003. Nothing in the Agreement shall constitute a
waiver of the right of HHS to examine or re-examine the unallowable costs
described above, including but not limited to the reopening of HealthSouth
Covered Cost Reports.
9. Within thirty (30) days of the Effective Date of the Agreement, any cost
report payments made to any HealthSouth Provider by HHS related to NPRs,
reopenings of cost reports, tentative settlements, administrative resolutions
or appeals issued on or after October 29, 2004 for HealthSouth Covered Cost
Reports must be refunded to HHS.
10. The Agreement is intended to be for the benefit of the Parties, including
HealthSouth and any HealthSouth Provider acquired by HealthSouth on or prior to
December 31, 2003 which submitted or could have submitted HealthSouth Covered
Cost Reports. For any HealthSouth Provider acquired on or before December 31,
2003, the Agreement covers cost reporting periods prior to the acquisition
date.
11. The Agreement does not release any obligations of any entity acquired by
HealthSouth after December 31, 2003. The Agreement does not release any
obligations of any HealthSouth Provider sold or otherwise disposed of for any
cost reporting period ending after the effective date of such sale or
disposition.
12. The Agreement does not apply to obligations to repay monies erroneously
paid to HealthSouth or any HealthSouth Provider due to representations made by
submissions of any Form UB-92 or CMS Form 1500 except the claims described in
paragraph II(G)(5) of the Department of Justice Settlement Agreement or any
actual or potential liability arising under the authority of the OIG for
program exclusion or the imposition of civil monetary penalties.
13. In the event that a Court sets aside, nullifies or cancels the Department
of Justice Settlement Agreement, in whole or in part, HHS and HealthSouth each
have the discretion to rescind the Agreement or elect to continue with the
obligations set forth in the Agreement. If either HHS or HealthSouth rescinds
the Agreement, all obligations of HHS, HealthSouth and all HealthSouth
Providers hereunder will be declared null and void.
14. In the event that the United States declares HealthSouth to be in Default
of the Department of Justice Settlement Agreement and HealthSouth does not cure
the Default, HHS only has the discretion to rescind this Administrative
Settlement Agreement. If HHS rescinds the Agreement, all obligations of HHS,
HealthSouth and all HealthSouth Providers hereunder will be declared null and
void. Regardless of whether HHS rescinds the Agreement, if HealthSouth fails to
cure the Default, nothing in the Agreement shall prohibit the United States
from exercising any remedies available under the Department of Justice
Settlement Agreement or otherwise.
15. Nothing herein affects the obligations of HealthSouth and the rights of the
United States and HHS pursuant to (1) the Department of Justice Settlement
Agreement; and/or (2) the December 2004 Corporate Integrity Agreement entered
into between HealthSouth and the OIG of HHS. Further, nothing herein releases
HealthSouth from any administrative monetary claim arising from HealthSouth's
charging of any unallowable costs (as that term is defined in paragraph III(S)
of the Department of Justice Settlement Agreement) incurred with respect to the
claims settled under the terms of the Department of Justice Settlement
Agreement and the December 2004 Corporate Integrity Agreement.
16. The Agreement is governed by the laws of the United States. Parties agree
that the exclusive jurisdiction and venue for any dispute between and among the
Parties under the Agreement will be the United States District Court for the
District of Columbia.
17. The Agreement does not constitute evidence or an admission by a party of
any liability of wrongful conduct.
18. The Agreement constitutes the entire agreement between the Parties with
respect to the subject matter of the Agreement and supersedes all agreements
and understandings, both oral and written, between the Parties with respect to
the subject matter of the Agreement.
19. The Agreement may not be amended or modified except by written consent of
the Parties.
20. The undersigned individuals signing the Agreement on behalf of the Parties
represent and warrant that they are authorized to execute the Agreement.
21. The Agreement is binding on HealthSouth's successors, transferees, heirs,
and assigns.
22. Facsimiles of signatures shall constitute acceptable, binding signatures
for purposes of this Agreement.
23. CMS agrees to communicate all relevant terms of the Agreement to its
Medicare contractors, including but not limited to its FIs, and will ensure
that its provisions are implemented.
CMS, Acting for and on behalf of the United
States Department of Health and Human Services
/s/ Xxxxxxx X. Xxxxxx
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By: Xxxxxxx X. Xxxxxx
Deputy Director
Office of Financial Management
Centers for Medicare & Medicaid Services
HealthSouth Corporation
/s/ Xxxxxxx X. Xxxxx
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By: Xxxxxxx X. Xxxxx
Executive Vice President, General
Counsel and Secretary
/s/ Xxxxxx X. Xxx
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By: Xxxxxx X. Xxx, Esq.
Xxxx X. Xxxxxxxxx, Esq.
Xxxx Xxxxx LLP