A Diagnostics & Imaging Week

Richard Scrushy, former CEO of HealthSouth (Birmingham, Alabama), will cut no plea bargaining deal with prosecutors in his corporate fraud trial and is ready for a retrial if necessary, his lawyers said as a deadlocked jury began its second week of deliberations on Monday.

The comments came in the midst of speculation that the jury's difficulty in reaching a verdict will result in a mistrial.

The jury adjourned on Monday without reaching a verdict. A U.S. District Court official later said the seven male and five female jurors would not work Tuesday, Thursday or Friday, citing juror scheduling and vacation conflicts.

Scrushy has denied any involvement in a $2.7 billion accounting fraud at the medical rehabilitation group, claiming the massive conspiracy was carried out by former financial executives without his knowledge.

Scrushy is charged with conspiracy, mail and wire fraud, money laundering and other wrongdoing in connection with a scheme to inflate HealthSouth's profits and stock price and allegedly enrich himself between 1996 and 2002.

He faces life in prison if convicted, with the final jury verdict considered an important initial test of Sarbanes-Oxley legislation holding a top executive accountable for his or her company's financial accounting. Scrushy is the first person being tried under the legislation.

In other legalities, Canadian operators who sold defective HIV test kits over the Internet have settled U.S. Federal Trade Commission charges of making deceptive advertising claims. The settlement bars the defendants from selling the "Discreet" HIV test kits to U.S. consumers, unless approved by the FDA, and prohibits them from making false or misleading claims about any medical diagnostic device or service.

The order also provides for notification to purchasers of the Discreet kits and requires destruction of hundreds of the defective kits seized by the U.S. Customs Service and Federal Express.

In May 2004, the FTC filed a suit in U.S. District Court against Seville Marketing and its principal, Gregory Stephen Wong, both of British Columbia. The agency alleged that defendants deceptively advertised that the Discreet test results were 99.4% accurate.

"In fact," the FTC said, "testing conducted by the Centers for Disease Control and Prevention [Atlanta] and submitted to the court showed that 59.3% of tested kits provided inaccurate results, including both inaccurate HIV-positive results and inaccurate HIV-negative results.

The FTC said that the case was brought with the "substantial assistance" of the CDC, the FDA, U.S. Customs and Border Protection, and the British Columbia Business Practices and Consumer Protection Authority.