Encompass Health, a Major National Chain of Rehabilitation Hospitals, Faces Serious Charges of Sexual Harassment


Encompass Health runs a chain of rehabilitation hospitals across the United States. It is enjoying record revenues. However, Charges of Discrimination and Retaliation filed with the Equal Employment Opportunity Commission (EEOC) by nine current or former women employees of the Encompass Colorado Springs hospital threaten its success.

For revenue growth, Encompass depends on expansion and keeping its facilities at maximum capacity, which in turn depends on growing its referrals. Rehabilitation hospitals receive most of their referrals from discharge planners—social workers and case managers—at acute care hospitals or other health care facilities. Case Management and Social Work is a woman-dominated field. Encompass competes with other rehabilitation hospitals for referrals from these women. Encompass’s women employees rated it fifth among six major competitors according to a Comparably study done in 2022.



As this case progresses, it raises the question whether Encompass will be able to maintain its level of patient referrals from what amounts to an all-woman source, or whether like the nine women, they will be nauseated by the treatment of the sexual harassment victims, and choose to send patients to its competitors.

The nine women who filed EEOC Charges allege that Encompass CEO, Steve Schaefer, who ran its Colorado Springs hospital permitted a senior healthcare provider to openly engage in repulsive physical and verbal sexual harassment of his female staff for almost a decade. Indeed, they allege he encouraged it, by engaging in sexual harassment himself. Schafer and other managers caused an exodus of Case Workers and Therapists who felt threatened by the provider, and the CEO who threatened the victims into silence, to cover up what had gone on for so long.

This case raises questions about whether Encompass’s enforcement of employment discrimination laws is sufficient, and whether there may be similar situations at other Encompass hospitals. Just what is alleged by the nine women in their Charges, discussed below, should raise concerns.

When a CEO Engages in Sexual Harassment of Subordinates, He Licenses Others in Power to Do the Same

As she alleges in her Charge, and as witnessed by another Charging Party, Schaefer told a Senior Manager at a staff meeting where other senior managers were present that her job was to “sit there and look pretty.” Other senior managers and providers followed his lead.

Encompass used a senior medical provider to treat its patients at its Colorado Springs hospital. The provider utilized a team that included therapists, nurses and case managers, who were women in their 20s and 30s.

For eight years, the senior provider subjected these women to unwanted sexual advances and touching, and vulgar sexual speech. He did so openly in front of managers reporting to CEO Schaefer. Just several examples of what the nine women regularly endured are:

  • Invading a Case Manager’s personal space to say “I want you to sit on my face;”

  • Telling a supervisor, in front of her reports: “if we had sex it would be rough sex, right?”

  • Telling a therapist he has video set up in his bedroom to record his sexual encounters;

  • Telling a therapist in reference to a hot tub at her home “I bet you guys f*ck in there all the time;”

  • Telling a therapist who was just out of school that he had a “sex swing” in his house, asking her to come over and see it, and while touching her inappropriately, telling her he had been searching for her on social media;

  • Repeating what a patient said when attempting an exercise, such as “that’s really hard,” and turning it into an unsubtle sexual innuendo in reference to genitalia;

  • Openly congratulating a male manager on hiring sexually attractive female therapists;

  • Responding with “I like volleyball girls’ bodies,” when a therapist told him she played volleyball.

Since 2017, the Lead Speech Therapist—a management position—routinely warned new female hires to expect the provider to refuse to take no for an answer, to touch them inappropriately, and to engage in vulgar sexual speech. She said her warnings were based on her personal experiences with him. In the fall of 2022, this manager declined to assign a young new hire just out of school to the senior provider’s team, because she believed the woman would be sexually harassed.

CEO Schaefer led by example, and other senior personnel got the message that sexual harassment of female employees was permitted, if not encouraged. He and other Encompass managers facilitated the senior provider’s sexual harassment of numerous victims, by normalizing it. As a result, the women who have brought Charges were disgusted by him, yet were forced to accept his sexual misconduct to perform and thereby keep their jobs treating patients.

In November 2022, Encompass received another warning of how bad the work environment was for its female employees. One of the nine women submitted an anonymous employee engagement survey in which she wrote that Respondent’s culture of approving sexual harassment was uncomfortable, that she did not feel comfortable going to Human Resources, and that training should be instituted to end the harassment. Although CEO Schaefer and Human Resources head Vaughn went over the survey results with employees, they said nothing about sexual harassment.

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