Scrushy acquittal doesn't mean the end of his HealthSouth troubles

The company's founder still has to fight lawsuits related to its accounting fraud, as well as rebuild his reputation.

By Katherine Vogt, AMNews staff. July 18, 2005.

Before his trial, Richard M. Scrushy said that when he was acquitted -- he always said when -- of charges relating to a $2.7 billion accounting-fraud scandal at HealthSouth Corp., he would like to go back to running the company he founded.

Now that he has been cleared of criminal wrongdoing, Scrushy, fired as CEO in March 2003 but still HealthSouth's largest shareholder, is taking some time to consider his next move.

But despite his June 28 acquittal after five months of a trial and jury deliberations, Scrushy is not in the clear. Scores of shareholders are suing Scrushy over the accounting fraud. The Securities and Exchange Commission, at press time, told an Alabama judge it wished to go forward with its $785 million civil case against Scrushy. Civil cases carry a lower burden of proof than criminal cases.

If the SEC action prevails, Scrushy may be prohibited from ever again serving as an officer or executive of a publicly traded company. Not that HealthSouth wants Scrushy back anyway.

"I can tell you I'm not hiring him for any position, and having consulted with the board, I've been told they are not going to replace me with him," said Jay Grinney, HealthSouth's president and chief executive officer, during a June 29 conference call with investors. "It is not a birthright."

Scrushy, on his personal Web site (www.richardmscrushy.com), has criticized Grinney specifically in postings lambasting HealthSouth's business decisions since he was fired. But even if Scrushy prevails in all his legal troubles, there's a question of whether Scrushy could ever regain the stature he once had in health care.