HealthSouth Corp., Birmingham, Ala., said that it will use a recently awarded $440 million tax recovery from the Internal Revenue Service to reduce its debt in an effort to improve the rehabilitation providers balance sheet. HealthSouth said that it received the tax recovery for overstatements of taxable income related to prior managements financial fraud. The payment includes a $296 million tax refund for years 1996 through 1999 and $144 million of associated interest income.
HealthSouth said that it made its final payment to the Securities and Exchange Commission stemming from a $100 million settlement in 2005. The company said that it expects to make its final payment to the U.S. Justice Departments Civil Division, HHS inspector generals office and the CMSrelated to a $325 million global settlement in 2004in the fourth quarter of 2007.
The refund is a key step in the companys plans to pay down debt, said John Workman, HealthSouths executive vice president and chief financial officer, in a news release. In addition, it will free up cash flow for further debt reduction in the future. -- by Jessica Zigmond
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