HealthSouth Corp. said a forensic review of its accounting history is complete and that the report's conclusions regarding the level of accounting fraud in the company's massive scandal are consistent with the rehabilitation provider's previous estimates. Earlier this year, HealthSouth said fraudulent entries totaled from $3.8 billion to $4.6 billion, a higher figure than a July 2003 estimate that put the potential fraud between $2.5 billion and $2.7 billion. HealthSouth said the estimates remain subject to revision as the company continues the reconstruction of its financial statements. Copies of the report were provided by the company to U.S. Attorney Alice Martin, the leading federal prosecutor in the case, and to the staff of the Securities and Exchange Commission.
Meanwhile, Kenneth Livesay, the first of fifteen former HealthSouth executives to plead guilty to criminal charges in the scandal, avoided jail time for his role. Livesay, previously an assistant controller and chief information officer at HealthSouth, was sentenced to five years' probation. Livesay, 43, must also pay a $10,000 fine, forfeit $750,000 for his part in overstating HealthSouth's earnings and assets, and spend six months under electronic monitoring. Prosecutors had been seeking a five-year prison sentence for Livesay, who agreed to cooperate with federal investigators as part of a plea deal. In April 2003, he pleaded guilty to falsifying financial records. -- by Julie Piotrowski