HealthSouth Corp., reeling from allegations of accounting and Medicare fraud, fired Richard Scrushy today as chairman and chief executive officer of the Birmingham, Ala.-based rehabilitation giant.
The action by the company's board of directors was effective March 19, the day the board placed Scrushy on administrative leave after the Securities and Exchange Commission filed a civil complaint charging HealthSouth with overstating earnings by $1.4 billion and adding about $800 million to its reported assets.
Scrushy, 50, who founded the company in 1984, also was asked to resign from the board of directors. He has been unavailable for comment.
Also Monday, the board fired Ernst & Young as its outside auditor. Though the company has blamed HealthSouth for deceptive accounting practices and is cooperating with authorities, critics have questioned why Ernst & Young wasn't able to detect massive fraud that reportedly went on for at least three years and possibly from the time HealthSouth went public in 1986.
Two top finance officials at HealthSouth already have pleaded guilty to criminal charges and are cooperating with federal authorities to build a case against Scrushy. As many as five other high-level finance officials are expected to reach similar plea agreements this week. The third employee to cut a deal with authorities is Emery Harris, 33, vice president of finance and assistant controller at HealthSouth, who was expected to plead guilty Monday to federal charges of wire fraud and securities fraud in Birmingham. -- by Michael Romano