Five more HealthSouth Corp. employees pleaded guilty today to criminal charges in connection with allegations of massive accounting fraud at the Birmingham, Ala.-based rehabilitation giant, the U.S. attorney's office there said. Those whose agreements with prosecutors were announced today are: Ken Livesay, 42, chief information officer; vice presidents Angela Ayers, 33, and Cathy Edwards, 39; group vice president Rebecca Kay Morgan, 35; and assistant vice president Virginia Valentine, 33. Two former chief financial officers and a former vice president already have struck deals with authorities admitting their participation in a scheme to overstate earnings by $1.4 billion and inflate assets by about $800 million since 1999; they have agreed to cooperate with prosecutors. No charges have been filed against the company's founder and former CEO, Richard Scrushy, who was fired last week by the board.
Meanwhile, company officials announced today they will eliminate about 165 nonclinical positions at the corporate headquarters, or about 20% of the workers at that location. HealthSouth said patient care has not been affected by the sweeping investigation of its accounting practices and billing procedures. "HealthSouth is committed to ensuring that patient-care services continue to be uninterrupted at its traditional high levels of quality," the statement said. "As the company gets back to the basic business of healthcare, it continues to assess resources and expenditures that do not directly impact patient care." -- by Michael Romano