Business
No fraud prosecution for HealthSouth
NEWS IN BRIEF — Posted June 5, 2006
Under a new agreement, HealthSouth Corp. won't face prosecution from the Dept. of Justice for the massive accounting fraud at the outpatient services chain.
The agreement, announced May 18, calls for HealthSouth to pay $3 million to a consumer fraud fund. It also requires that HealthSouth continue to cooperate with federal investigators, and it places the company "in essence" on probation until May 2009, U.S. Attorney Alice H. Martin said, though the company admits no wrongdoing.
Martin said the agreement acknowledges "the comprehensive corporate governance and compliance reform" that has taken place and is continuing at Birmingham, Ala.-based HealthSouth.
The agreement also noted that HealthSouth agreed to pay the Securities and Exchange Commission $100 million and to pay civil litigants $445 million to settle claims stemming from the multibillion-dollar accounting fraud at the company, which was first revealed in 2003 and led to criminal convictions against more than a dozen former employees.
HealthSouth board chair Jon F. Hanson said in a written statement that the company was "delighted to put this chapter behind us."
The company also filed its first regular quarterly earnings report since the accounting scandal surfaced, revealing a wider loss and dip in revenue. It reported a loss of $435 million, or $1.09 per share, for the quarter that ended March 31, compared with a loss of $258 million, or 65 cents per share, for the same period a year earlier. Revenue was down to $792 million from $849 million the year before.
Note: This item originally appeared at http://www.ama-assn.org/amednews/2006/06/05/bibf0605.htm.
