A Medical Device Daily

Calling “unconscionable” the attempt by Richard Scrushy, formerly chief executive of HealthSouth (Birmingham, Alabama) to retain millions of dollars in bonuses from the company, the Alabama Supreme Court on Friday rejected that proposal.

The court ruled that Scrushy must disgorge $47.8 million in bonuses, the ruling coming as the product of a lawsuit by a single shareholder.

Scrushy was ordered by a trial court in January to return the bonuses to the struggling healthcare company, and he appealed that decision.

The repayment was on hold during Scrushy's unrelated criminal trial in U.S. court in May, in which he was convicted of bribing Don Siegelman, a former Alabama governor (Medical Device Daily, June 5, 2006). The ruling puts somewhat of a dent in Scrushy's bank account, which has been estimated at nearly $300 million by prosecutors.

He still faces other charges in the same civil suit as well as from a U.S. Securities and Exchange Commission fraud complaint and other shareholder suits.

“It would be unconscionable to allow Scrushy to retain millions of dollars awarded to him in the form of bonuses at the expense of the corporation he served as chief executive officer and its shareholders,” the court said in a 27-page ruling.

The bonuses were paid because the company reported that it exceeded income targets, reports that were later found inflated by company executives. The books have since been restated.

In other court news, AGA Medical (Golden Valley, Minnesota) reported that it has filed a patent infringement lawsuit against Occlutech (Jena, Germany) and Drabo Medizintechnik (Cologne Germany).

AGA says that it received the European patent in question (EP 0 808 138) in October 2005 for intravascular occlusion devices and the method of forming or manufacturing these medical devices.

The action, filed in Dusseldorf, requests damages against Occlutech, Drabo and their CEOs, and requests an injunction prohibiting them from manufacturing and marketing what it alleges is the infringing Figulla Occluder.

“Our devices lead the market in sales and innovation; we will not tolerate even the most minor violation of our patents,” said Franck Gougeon, president/CEO of AGA.

AGA develops devices for treating holes in the heart, such as atrial septal and patent foramen ovale defects.