Accounting & Tax

Scrushy Campaigns for His Old Job

HealthSouth's former CEO and chairman wants to help the company recover from its $2.7 billion accounting scandal, yet in court he admitted to havin...
Stephen TaubSeptember 16, 2005

The former chief executive of HealthSouth Corp., whose acquittal of charges related to the health care provider’s $2.7 billion accounting scandal stunned many observers, now wants to play a key role in the company’s recovery. “I have the numbers, clean numbers from the day I walked out of HealthSouth,” Scrushy said at a news conference at a Birmingham hotel, according to Reuters.

Scrushy, who still sits on the board despite many requests from the company that he resign, was reacting, in part, to a company announcement on Tuesday that second-quarter earnings came in below expectations due to weakness in its most important business, inpatient rehabilitation, reported the wire service.

Speaking at the press conference, Scrushy said he was appalled at the events that transpired over the past few years. “I spent 20 years at HealthSouth,” he reportedly said. “I have tremendous insight. I was found not guilty. That is the past. This is the future.” According to the report, Scrushy scoffed at a statement made by HealthSouth CEO Jay Grinney that it would take three to four years to turn around the company.

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For its part, the company vowed not to solicit their former leader’s help under any circumstances. HealthSouth spokesman Andy Brimmer told Reuters the company expects Scrushy to be removed from his directorship once the company finally holds an annual meeting.

In a lengthy statement released on Thursday, HealthSouth officials said, “It is astonishing that [Scrushy] would have the audacity and shamelessness to comment on the current operations or the dedication of our approximately 40,000 employees.” They noted that Scrushy will not be offered any position within the company, and under no circumstances would its officers reach out to Scrushy, “who by his own defense has claimed a complete lack of knowledge as to the financial workings of the company during his tenure as CEO and chairman, despite his claims of possessing valuable expertise.”

“Under Scrushy’s so-called stewardship, the company’s former management touted earnings and revenues that have now been proven to be a fiction,” the statement continued. Additionally, officials pointed out that HealthSouth’s new management team, together with assistance from several external resources, determined that the company’s internal controls were completely inadequate and millions of dollars of shareholder money was wasted on pet projects completely unrelated to HealthSouth’s core operations.

Management concluded that, “among the beneficiaries of the fraudulent conduct of the company’s former management is Richard Scrushy.” In the statement, officials assert that several outside parties, including the Securities and Exchange Commission and shareholder and bondholder groups, have filed civil lawsuit against Scrushy seeking “to recover what they consider ill-gotten gains.”

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