A six-week investigation by a law firm hired by HealthSouth Corp., Birmingham, Ala., cleared company Chairman Richard Scrushy of alleged insider trading in May and July stock and loan repayment transactions, HealthSouth said. In reviewing nearly 13,000 documents and interviewing key company employees, managers, board members and outsiders, the Houston law firm of Fulbright & Jaworski uncovered "no oral interview or written document" indicating Scrushy had prior knowledge of a Medicare reimbursement rule change or its impact, HealthSouth said. In late August, the company announced that a recent Medicare ruling might reduce its pretax earnings by $175 million a year. Its stock plunged 44% that day and 25% the next. In announcing the law firm's findings, HealthSouth said it would "cooperate fully in all respects" with the Securities and Exchange Commission's inquiry into the transactions and would forward to the SEC a copy of the law firm's report. In a written statement, Scrushy said he was pleased by the firm's findings. -- by Julie Piotrowski
HealthSouth review clears Scrushy of insider deals
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