HealthSouth devalues 2000-2001 profit statements by $1B
Compliance Monitor, June 29, 2005
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As jurors deliberated for a 20th day in the $2.7 billion healthcare fraud trial of HealthSouth CEO Richard Scrushy, the Birmingham, AL-based rehab giant restated its 2000 and 2001 profits by $1 billion in a 1,600-page filing with the Securities and Exchange Commission (SEC), USA Today reported June 27.
The report to the SEC contained admissions of "weak internal controls" and "extensive conflicts of interest," according to the USA Today report. The comapny also owned up to "substantial" declines in the profits of several of its businesses, further complicating things for new management.
"It's a classic example of everything that went wrong: revenue inflation, bilking Medicare, [and] an imperial CEO," Jack Ciesielski, publisher of The Analyst's Accounting Observer, told USA Today.
After HealthSouth announced its filing, Scrushy defense attorney Donald Watkins criticized the timing of the move as "awkward" given the continuing indecision of the jury, USA Today reported. He said the company should have waited to file the report until the trial was over.
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