Wednesday, January 4, 2006

Scrushy Ordered to Repay $47.8 Million in Bonuses

You can't keep track of all the litigation related to HealthSouth and its former CEO, Richard Scrushy, without a crib sheet these days.  In addition to the federal corruption charges against Scrushy (and former Alabama Governor Don Siegelman), the SEC's securities fraud suit against him related to the accounting problems at the company, a breach of contract action between Scrushy and Healthsouth related to his dismissal as CEO in 2003, and a pair of libel actions againsts the Birmingham News and a radio talk show host, a Jefferson County (AL) judge has found against Scrushy in a shareholder derivative action.  The judge found that Scrushy was unjustly enriched in receiving $47.8 million in bonuses from the company based on meeting certain profit targets due to the accounting fraud that inflated HealthSouth's earnings from 1997 through 2003.  An AP story (here) notes that the judge found Scrushy was liable to return the bonuses regardless of whether he knew about the fraud because he did not deserve them.  Needless to say, this one is likely to be appealed, joining the other cases as they fill up the federal and state courts in Alabama. (ph)

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