Federal prosecutors made it a perfect five-for-five against former HealthSouth Corp. CFOs late Thursday, charging the company's original and longest-serving top auditor with bank fraud in the deepening investigation into financial trickery at the Birmingham, Ala.-based operator of rehabilitation and surgery centers.
According to U.S. Attorney Alice Martin in Birmingham, Aaron Beam, 59, of Fairhope, Ala., who served as CFO from the company's founding in 1984 until October 1997, has agreed to plead guilty to one count of bank fraud and one count of criminal forfeiture.
The government says that Beam participated from April 1996 until the time he left HealthSouth in a deliberate effort to file bogus financial data in hopes of obtaining loans and credit from AmSouth Bank in Birmingham.
Beam is the fifth former HealthSouth CFO and 11th former executive to offer a guilty plea in the ongoing investigation. HealthSouth has had just five CFOs in its history.
Company founder and recently ousted Chairman and CEO Richard Scrushy has been implicated in the alleged scheme but, so far, has not formally been charged with any crime, though his personal assets have been frozen by court order and he faces Securities and Exchange Commission charges of insider trading.
HealthSouth stands accused of overstating profits by $2.5 billion between 1997 and 2002 and with inflating the value of company assets by $800 million in public financial reports.
Federal officials have told Modern Physician that they suspect the wrongdoing dates to 1986.
The House Energy and Commerce Committee on Tuesday opened an investigation into accounting irregularities and possible Medicare and Medicaid billing fraud at the company.
Energy and Commerce leadership says that HealthSouth "may have submitted hundreds of thousands of claims for reimbursement to Medicare and Medicaid based on improper billing of certain rehabilitative therapy claims."
The committee cites evidence collected by Blue Cross and Blue Shield of Alabama, the CMS billing intermediary in HealthSouth's home state.