A Medical Device Daily

The trial of former HealthSouth (Birmingham, Alabama) CEO Richard Scrushy started in Birmingham Tuesday. Scrushy faces 58 criminal counts, including conspiracy to commit fraud, filing false financial statements, securities and wire fraud and money laundering at the rehabilitation and surgical clinics company.

Describing Scrushy as “the flamboyant Birmingham mogul“ accused of orchestrating a $2.64 billion accounting scandal at the healthcare company he founded, Reuters reported that he will be “the first major U.S. executive to be tried for violating the Sarbanes-Oxley Act,“ which was passed in 2002 and imposes strict criminal penalties on top-level officials who certify false financial statements filed with the Securities and Exchange Commission.

If convicted of all charges, Scrushy faces up to 650 years in prison and more than $36 million in fines, plus forfeiture of any so-called ill-gotten gains, possibly including several homes, boats, planes and luxury automobiles.

The entrepreneur and “local celebrity,“ who once hobnobbed with the rich and famous and had his name adorning buildings all over Alabama, is accused of ordering the overstatement of HealthSouth earnings and assets for several years in order to prop up the company's share price.

The trial will be the climax of a scandal that has been playing out in the Alabama courts and national media for nearly two years.

Med-Emerg International (MEII; Mississauga, Ontario) on Monday filed a $100 million Statement of Claim against Calian Technology Ltd. and a former employee of Med- Emerg in the Ontario Superior Court of Justice, claiming breach of confidence, breach of fiduciary duty and unlawful interference with economic interests.

Last week, Med-Emerg filed an objection with Public Works and Government Services Canada (PWGSC) to the manner in which the government of Canada's procurement for medical staffing services was conducted. This included the evaluation of Med-Emerg's submission to the Request for Proposal (RFP), and to the award of the health services contract, valued at $448,810,965, to Calian, a Canadian technology services supplier with no apparent experience in medical staffing.

Med-Emerg said it believes “substantial evidence“ exists to demonstrate that Calian used confidential information obtained through the hiring of a former Med-Emerg employee to win the contract, and that the former Med-Emerg employee retained by Calian breached his legal obligations by disclosing financial and other information confidential to Med-Emerg.

“That the federal government would award this contract, the largest outsourcing contract for medical staffing services in Canada, to a company with no apparent experience in the healthcare services field, raises serious concerns,“ the company said. “The available evidence clearly demonstrates, however, that the contract was awarded based on the unlawful use of information by the selected bidder and the improper application of both published and unpublished evaluation criteria by the contract evaluators.“

As a result, and given what it termed the “serious irregularities“ affecting the procurement, the company said it was requesting that the contract awarded to Calian on Dec. 15 be terminated immediately and awarded to Med-Emerg or, alternately, that a new procurement be conducted.

MEII specializes in the coordination and delivery of emergency and primary health care related services in Canada. These services include physician and nurse staffing and recruitment, clinical management services, a national drug infusion service and a comprehensive physician practice management program.

The Scruggs Law Firm PA (Oxford, Michigan) issued a news release reporting that a class-action suit has been brought against Carle Foundation Hospital (Champaign-Urbana, Illinois) with “widespread community support and outrage at Carle's discriminatory treatment of uninsured patients, including its highly controversial billing and debt collection practices that has included issuing 'body attachments' arrest warrants against uninsured patients who cannot afford to pay what the law firm described as “the inflated rates Carle specifically charges the uninsured.“

The lawsuit, which was filed in the Illinois Circuit Court of Champaign County, is the 65th lawsuit filed against 60 hospital systems in state and federal courts as part of a nationwide class-action litigation that commenced on June 17, 2004. The litigation currently spans 24 states.

The suit charges the hospital with forcing uninsured patients to pay unreasonable and highly inflated rates, failing to provide them with the opportunity to apply for charity care, and using reprehensibly aggressive and humiliating collection tactics against people who cannot afford to pay the inflated bills. These practices, the suit said, violate the Illinois Consumer Fraud and Deceptive Business Practices Act and breach Carle's duty under state law to only charge people the fair and reasonable value of the services provided to them.