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Cases in Court

By ALM Staff | Law Journal Newsletters |
April 01, 2003

HealthSouth Executives Implicated in Government Probe

Guilty pleas have been entered for the first time under new Sarbanes-Oxley Provisions. On April 5, 2003, the New York Times reported that Richard Scrushy, former Chief Executive Officer for HealthSouth Corporation, the largest provider of diagnostic imaging, outpatient surgery, and rehabilitation services with locations in 50 states and abroad, has been targeted by regulators for allegedly helping to overstate the company's earnings by more than $2 billion during the past 6 years. Bill Hicks, an SEC attorney, was quoted as stating that Scrushy “could be forced to pay $785 million or more if he loses a government lawsuit accusing him and the company of fraud,” and that “[i]t could go up if we find more insider trading or more profiting from the fraud.” Eight former HealthSouth executives have plead guilty so far, including pleas from both a former and the current financial officer of the chain in late March 2003, under the new Sarbanes-Oxley measures. See “Sarbanes Oxley Claims First CFO,” SmartPros (March 28, 2003).

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