Saturday, December 17, 2005

Scrushy Sues HealthSouth for $70 Million

Former HealthSouth CEO Richard Scrushy filed a lawsuit against the company for breach of his employment agreement on the ground that his acquittal in June means that he should not have had the benefits of the contract terminated.  The five-year contract calls for annual pay of $1.2 million and at least that amount in yearly bonuses, along with other benefits.  HealthSouth's board of director's declared Scrushy's contract "null and void" as of March 19, 2003, the date he was put on administrative leave after the government's investigation of the company became public (see Form 8-K here).  Scrushy alleges in his suit, filed in state court in Jefferson County, Alabama, that the agreement can only be terminated if he is convicted of a felony, which did not happen in the first trial, although it could in a second prosecution for bribery involving former Alabama Governor Don Siegelman that is pending in the Middle District of Alabama. 

Along with his claim for damages, Scrushy seeks attorney's fees for pursuing the breach of contract action.  If he is successful, this would add to HealthSouth's tab for the cost of his representation because the company is likely on the hook for the attorney's fees from the first criminal trial, and will be for the SEC case if Scrushy is successful in that proceeding.  This one is going to just keep getting messier, and costlier for HealthSouth if Scrushy prevails in the various litigation.  A Birmingham News story (here) discusses Scrushy's lawsuit. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/12/scrushy_sues_he.html

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