A Diagnostics & Imaging Week

The judge in the civil lawsuit brought by the federal government against Richard Scrushy, former CEO of HealthSouth (Birmingham, Alabama), has thrown out two claims of fraud against him. But she allowed five non-fraud claims relating to the massive overstatement of earnings at HealthSouth that the government charges was orchestrated and abetted by Scrushy.

Scrushy was acquitted in June, by a Birmingham jury, of nearly three dozen criminal charges related to the overstatements of nearly $2.7 billion over several years.

U.S. District Judge Inge Johnson said the two counts of fraud counts in the suit – the third version of the case filed by the Securities and Exchange Commission (SEC) – weren’t specific enough.

“The second amended complaint contains argument, speculations, hypotheticals and perhaps an outline of closing statements, none of which are appropriate in a complaint,” Johnson said in a 15-page ruling. She said that prosecutors would have 15 days to refile the fraud counts.

The SEC is seeking $785 million in civil penalties again-st Scrushy.

Jan. 18 has been set as the date for Scrushy’s lawyers to begin mediation talks with SEC attorneys. HealthSouth has settled its portion of the suit by agreeing to a payment of $100 million.

Scrushy has since been indicted in Montgomery in a bribery scheme involving former Alabama Gov. Don Siegelman.

Fifteen former HealthSouth executives pleaded guilty in the earnings overstatement, and jurors convicted another one, Hannibal (Sonny) Crumpler, last month, with Crumpler ordered to disgorge almost $1.4 million. He faces a maximum prison sentence of 15 years and additional fines of up to $1.3 million.

The law firm of Andrew Grosso & Associates (Washington) reported settlement of a lawsuit between its client, Pei Tang, and CorSolutions (Rosemont, Illinois), a disease management firm.

Tang filed her lawsuit as a counterclaim alleging that the company sought to have her discharged from her new employer, Alere Medical (Reno, Nevada), where she is vice president of health informatics and outcomes, after CorSolutions had filed a lawsuit against Tang.

A stipulation of dismissal was filed by the parties with the court Dec. 1.

As part of the settlement, the parties agreed to dismiss their claims against each other, and CorSolutions paid Tang’s legal fees. Tang said she was “very pleased” with the settlement.

CorSolutions provides healthcare technique services intended to achieve cost reductions.

Tang’s counterclaim charged that the company took retaliatory action against her after she submitted to the company’s board – as the company’s vice president of informatics and outcomes management – a confidential report alleging data manipulation and fraud by senior management.

According to Tang’s complaint, CorSolutions’ senior management directed that data in the company’s files be manipulated to make it appear that patient and physician satisfactions with the company’s services were higher than actually measured. This was done, she charged, to convince customers concerning achievement of goals that had not been met.

CorSolutions’ initial lawsuit against Tang was filed in December 2004, in the Circuit Cook of Cook County, with Tang’s countersuit filed soon after.

Alere Medical provides technology and services that remotely monitor patients with advanced heart failure.