Risk Management

Jail after All for Ex-HealthSouth Finance Exec?

Livesay got home detention after helping the U.S. case, but the light sentence again is being reviewed for the former assistant controller.
Stephen TaubApril 24, 2008

A former HealthSouth assistant controller whose original sentence had spared him prison time may be headed there after all.

A federal appeals court once again has granted a government request to vacate the earlier sentence handed down for Kenneth K. Livesay, who received house arrest and probation after pleading guilty to his role in the company’s $1.4 billion fraud scheme, according to the Associated Press.

In addition to serving as HealthSouth assistant controller from 1989 to November 1999, Livesay also was its chief information officer.

Five years ago, he pleaded guilty to conspiracy to commit wire fraud and securities fraud and falsification of financial information. In June 2004, U.S. District Judge U.W. Clemon sentenced Livesay to six months of home detention and five years of probation, citing Livesay’s assistance with the investigation and his lack of a criminal record.

The government, however, asked that Livesay get 12 months prison time, the maximum of the six- to 12-month range the judge had established, according to the AP, citing the appeals court opinion.

This is the third time the 11th Circuit Court of Appeals has heard the case. Both previous times the case was remanded to the district judge, who stuck with his original sentence of probation and house arrest. In the first go-round, the appeals court vacated and remanded Livesay’s sentence of probation after concluding that the record provided a “scant basis to assess” the reasonableness of that sentence.

On remand, the district court again sentenced Livesay to probation, and the Appeals Court again reversed, determining the sentence to be “unreasonable.” Livesay appealed that decision and the Supreme Court remanded to the appeals court for this latest reconsideration, citing an earlier case, Gall v. United States.

“After reconsideration in light of Gall and affording substantial deference to the district court’s sentencing determinations, we conclude that the district court committed Gall procedural error, and thus we must vacate Livesay’s sentence and remand,” the appeals court stated in its latest ruling.

It explained that even though the district court stated that it would exercise its discretion to impose the same sentence even if its departure was erroneous, “it committed Gall procedural error by failing to adequately explain why it would do so in order to allow for meaningful appellate review.” The court also remanded the case for resentencing.