Medicare Oversight Gaps: Deadly Errors at For-Profit Rehab Hospitals Like Encompass Go Unpunished

#Tags: #EncompassHealth #RehabHospitalSafety #MedicareOversight #ForProfitHealthcare #PatientSafety #HospitalInspection #MedicalNegligence #HealthcareAccountability #PreventableDeaths #CMS

Widespread Safety Failures in a Booming Industry

Rehabilitation hospitals, particularly those operated by for-profit corporations like Encompass Health, have grown into a highly lucrative sector of the healthcare industry. Yet despite their rapid expansion and profitability, serious incidents involving patient harm—including preventable deaths—are going largely unpunished and undisclosed by federal oversight bodies.

Encompass Health, the nation’s largest for-profit rehab hospital chain with 168 locations, has been linked to a disproportionate number of safety violations and poor outcomes, including some of Medicare’s worst-rated readmission facilities. While Medicare tracks key safety metrics such as “discharge to community” and “preventable readmissions,” there are no standardized penalties—like fines or public five-star ratings—for rehab hospitals, unlike nursing homes or general hospitals.

Fatal Mistakes at Encompass Health Facilities

Carbon Monoxide Poisoning in West Virginia

Elizabeth VanBibber, 73, died after a carbon monoxide leak during construction at Encompass’ Huntington, WV facility. Despite warnings to isolate construction areas, Encompass failed to implement proper safeguards. Staff initially ignored her symptoms. Emergency responders found dangerously high CO levels. She died days later.

Alarming Medication Errors in South Dakota

Frederick Roufs, 73, died after receiving the wrong medication—hydralazine instead of hydroxyzine. Inspectors found a troubling pattern of medication errors at the Encompass Sioux Falls hospital. Another incident involved a patient receiving 10x the insulin dose due to a misread order.

Death from a Preventable Fall in Tennessee

In Jackson, TN, a patient died in a pool of blood after falling from bed. The alarm meant to alert staff was switched off. Similar alarm failures occurred at Encompass’ Morgantown, WV facility, where a patient died with a severe head wound.

Improper Use of Antipsychotics

In Texarkana, TX, Encompass received an “immediate jeopardy” violation for using antipsychotic drugs to pacify patients—violating federal guidelines.

No Penalties Despite Deadly Violations

While these errors are documented by federal inspectors as “immediate jeopardy” violations—indicating a serious threat to patient health—CMS cannot impose fines on rehab hospitals. The only enforcement option is to cut off all Medicare and Medicaid funding, a rarely used and extreme measure.

This stands in contrast to nursing homes, where nearly 8,000 facilities were fined in the past three years, with average penalties around $28,000. As a result, even the most egregious violations at rehab hospitals carry no meaningful consequences, as long as facilities pledge to correct the issues.

One exception: California fined Encompass $75,000 in a case involving blood sugar mismanagement that led to a patient’s death—thanks to state laws allowing such penalties.

Profit First? For-Profit Model Under Scrutiny

Encompass’ financial success is undeniable: In 2024, the company reported an 11% net profit, earning $597 million on $5.4 billion in revenue. It plans to open 17 new hospitals by 2027. Encompass frequently enters new markets by forming joint ventures with nonprofit hospitals, which shut down their internal rehab units in exchange for equity.

But critics say this profit-driven model compromises patient care. A University of Texas study found that for-profit status was the strongest predictor of higher unplanned readmission rates in rehab hospitals.

In fact, Encompass owns 34 of the 41 rehab hospitals that Medicare rates as having statistically worse preventable readmission rates after discharge. It also owns 28 of the 87 hospitals with poor readmission rates during patients’ stays—mostly for-profit facilities.

Hidden from Public View

Medicare does not publish rehab hospital inspection reports on its Care Compare website, leaving patients and families in the dark. KFF Health News had to sue the government to access these records. Unlike nursing homes, rehab facilities receive no public star ratings for safety or quality.

Although the Biden administration proposed a 1-to-5-star rehab rating system, its future remains uncertain. The industry’s trade group, the American Medical Rehabilitation Providers Association, has pushed for a delay. The Trump administration has not confirmed if it will proceed with the reform.

The Troubling Case of Paul Webb Jr.

Paul Webb Jr., 74, was recovering from a brain bleed at Encompass’ Erie, PA facility in 2021. According to a lawsuit, staff left him seated for hours, causing a pressure ulcer. The wound worsened in subsequent care and ultimately contributed to his death. His family’s lawsuit alleges negligence in failing to reposition him regularly.

Webb’s case is one of several lawsuits filed against Encompass alleging that improper wound care and neglect led to fatal outcomes. The company denies liability in these cases, stating that its pressure sore rates align with national averages.

A History of Legal Trouble

Encompass has a checkered past. Formerly known as HealthSouth, the company was involved in a $2.7 billion accounting fraud scandal in 2003 and paid $325 million to settle Medicare fraud claims. In 2019, it paid $48 million to settle allegations of misdiagnosing patients and admitting those too ill to benefit from rehab. It has consistently denied wrongdoing.

Conclusion: Accountability Urgently Needed

The pattern of deadly errors, lack of penalties, and hidden safety data raises urgent questions about patient safety and oversight at for-profit rehab hospitals like Encompass Health. As this segment of healthcare continues to grow rapidly, experts warn that without stronger regulatory tools—including fines and public reporting—preventable tragedies will continue to go unpunished and undisclosed.