Accounting & Tax

Scrushy, HealthSouth Settle Claims

The former CEO pays back millions in bonuses to HealthSouth after subtracting his legal expenses. His lawsuits claiming the company violated his co...
Stephen TaubNovember 30, 2006

Former HealthSouth Corp. CEO Richard Scrushy and the health-care company that fired him have settled separate claims against each other stemming from the company’s $2.7 billion accounting fraud, according to published reports.

HealthSouth wanted Scrushy to return his $48 million in bonuses, while Scrushy wanted the company to pay $21 million in his legal bills related to his trial, which ended in an acquittal, according to the Associated Press.

Both parties confirmed there was a settlement but refused to provide terms of the deal.

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However, The Birmingham News reported that Scrushy agreed to give back $31 million in bonuses to HealthSouth.

HealthSouth CFO John Whittington would only tell the paper: “We did reach an agreement. It is one aspect of the case, and it is resolved.”

The AP noted that still unresolved are HealthSouth’s claims that Scrushy wrongly profited during the fraud, and Scrushy’s charge that his former employer violated his contract when he was fired after the fraud was uncovered. “The rest of the lawsuit is still going forward,” Whittington told the wire service.

“We’ve got a partial agreement on some things, but we’ve still got some things to work on,” Scrushy spokesman Charlie Russell told the wire service.

According to the report, last month, the Alabama Supreme Court refused to reconsider a previous order that Scrushy repay more than $47.8 million, from bonuses he had received.

Scrushy was deemed to owe the company more than $52 million, including interest. However, this sum was offset by a separate arbitrator’s ruling requiring HealthSouth to reimburse Scrushy for legal bills stemming from his trial, according to the AP.

The Birmingham paper said Scrushy dropped his claim to $21 million, leaving him to pay $31 million out of pocket.