A Medical Device Daily
Imprisoned former HealthSouth (Birmingham, Alabama) CEO Richard Scrushy was ordered by the Jefferson County Circuit Court to pay shareholders $2.88 billion in a civil lawsuit that blames him for a huge accounting fraud that almost sent the rehabilitation company into bankruptcy.
Scrushy was acquitted in a federal criminal case for related charges and testified in the state civil suit that he was unaware of the fraud. But 15 former HealthSouth executives pled guilty and a 16th was convicted. Several testified in the civil case, saying Scrushy knew about the fraud.
Scrushy is currently serving a seven-year sentence for a 2006 conviction in a separate state bribery case.
"We are pleased to see that justice has been served through this judgment and that another chapter of our past has been put behind us," a company spokesman said in a prepared statement. "Mr. Scrushy, who was convicted earlier of a felony by a federal court, has now been found responsible through this civil trial for the multi-billion dollar fraud that took place under his management. Although we do not at this time know whether and to what extent the judgment against Mr. Scrushy is collectible, we will pursue collection aggressively and to the full extent permitted by law."
HealthSouth estimated that the net recovery to the company would be about 40% of any amounts recovered.
In May, Scrushy and former Alabama Gov. Don Siegelman lost another legal round in the 2006 bribery case.
That conviction stemmed from $500,000 in contributions made by Scrushy to a campaign fund for a state lottery, said to be a payoff for Siegelman reappointing Scrushy to a state hospital licensing board.
The original U.S. District Court conviction was upheld in March by a three-judge panel of the U.S. Court of Appeals in Atlanta (Medical Device Daily, March 10, 2009).
HealthSouth operates in 26 states across the country and in Puerto Rico.