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Item 3. Legal Proceedings

2022-03-01 compared with 2021-03-01 · 33 added, 19 removed, 11 unchanged (83% of the section changed)

LEGAL PROCEEDINGS.

We are a party to various legal actions, proceedings, and claims (some of which are not insured), and regulatory and other governmental audits and investigations in the ordinary course of our business.

We are a party to various legal actions, proceedings, and claims (some of which are not insured), and regulatory and other governmental audits and investigations

in the ordinary course of our business.

We cannot predict the ultimate outcome of pending litigation, proceedings, and regulatory and other governmental audits and investigations.

These matters could potentially subject us to sanctions, damages, recoupments, fines, and other penalties.

The Department of Justice, CMS, or other federal and state enforcement and regulatory agencies may conduct additional investigations related to our businesses in the future that may, either individually or in the aggregate, have a material adverse effect on our business, financial position, results of operations, and liquidity.

These matters could potentially subject us to sanctions, damages,

recoupments, fines, and other penalties.

in the aggregate, have a material adverse effect on our business, financial position, results of operations, and liquidity.

Healthcare providers are subject to lawsuits under the qui tam provisions of the federal False Claims Act.

Qui tam lawsuits typically remain under seal for some time while the government decides whether or not to intervene on behalf of a private qui tam plaintiff (known as a relator) and take the lead in the litigation.

These lawsuits can involve significant monetary damages and penalties and award bounties to private plaintiffs who successfully bring the suits.

We are and have been a defendant in these cases in the past, and may be named as a defendant in similar cases from time to time in the future.

Florida Litigation

On August 19, 2019, we received notice of a qui tam lawsuit filed by a relator on behalf of the United States, titled U.S.

Bonnie Elsdon, v.

Qui tam lawsuits typically remain under seal for some

time while the government decides whether or not to intervene on behalf of a private qui tam plaintiff (known as a relator) and take the lead in the litigation.

These lawsuits can involve significant monetary damages and penalties and award

bounties to private plaintiffs who successfully bring the suits.

We have been a defendant in these cases in the past, and may be named as a defendant in similar cases from time to time in the future.

Settlement of a Legal Matter

On August 19, 2019, we received notice of a qui tam lawsuit (“the Complaint”) filed by a relator on behalf of the United States, titled U.S.

Bonnie Elsdon,

Physical Therapy, Inc., U.S.

1 unchanged sentence

This whistleblower lawsuit was filed in the U.S.

District Court for the Southern District of Texas, seeking damages and civil penalties under the federal False Claim Act.

This lawsuit was originally filed under seal by a former employee of The Hale Hand Center, Limited Partnership (“Hale Partnership”), a majority-owned subsidiary of the Company, on May 25, 2018.

District Court for the

Southern District of Texas, seeking damages and civil penalties under the federal False Claim Act.

This lawsuit was originally filed under seal by a former employee of The Hale Hand Center, Limited Partnership (“Hale Partnership”), a

majority-owned subsidiary of the Company, on May 25, 2018.

The U.S Government declined to intervene in the case and unsealed the Complaint on July 17, 2019.

The plaintiff - relator served the Complaint on us and the other named defendants on August 19, 2019.

The Complaint alleges that the Hale Partnership engaged in conduct to purposely “upcode” its billings for services provided to Medicare patients.

The plaintiff - relator points to three dates of service and provides examples of what it alleges are inflated billings by the Hale Partnership;

the relator then claims that similar false claims must have occurred on other days and at other Company-owned partnerships.

The Complaint alleged that the Hale Partnership engaged in conduct to purposely “upcode” its billings for services provided to Medicare patients.

The plaintiff -

relator also claimed that similar false claims occurred on other days and at other Company-owned partnerships.

On October 3, 2019, we filed Motions to Dismiss based on numerous grounds on behalf of each of the named defendants.

On October 29, 2019, the plaintiff-relator dismissed three of the named defendants, Rehab Partners #2, Inc., U.S.

On October 29, 2019, the plaintiff-relator

dismissed three of the named defendants, Rehab Partners #2, Inc., U.S.

Physical Therapy, Ltd., and Suzanne Hale.

The Motions to Dismiss as to the remaining two defendants has been fully briefed and is pending before the Court for a ruling.

We have engaged counsel and fully investigated the matter, and believe that the allegations in the Complaint have no merit.

We intend to vigorously defend this action, but at this time we are unable to predict the timing and outcome of the matter.

The Motions to Dismiss were denied on November 30, 2020.

In January 2022, to avoid the legal fees and discovery costs in defending this

matter and the uncertainty of protracted litigation, the Company entered into a settlement agreement with the plaintiff-relator.

In the settlement agreement, the plaintiff-relator released all defendants from liability for all conduct

alleged in the Complaint, and the Company admitted no liability or wrongdoing.

In connection with the settlement, the Office of the United States Attorney for the Southern District of Texas agreed to a dismissal of the claims against the Hale

Partnership and the Company.

Under the terms of the settlement, the Company agreed to make payments to the government, the plaintiff-relator and her counsel.

Such payments, in the aggregate, amounted to $2.

75 million of which $2.6 million was recorded as an expense in 2021 .

MINE SAFETY DISCLOSURES.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings