Former HealthSouth Corp. chief executive Richard M. Scrushy yesterday stepped up a fight to recover millions of dollars in back pay and benefits he lost after the hospital chain's board fired him amid a $2.7 billion accounting scandal nearly three years ago.
Scrushy, who was acquitted by a Birmingham jury of three dozen fraud and false statement counts in June, remains one of the company's biggest individual shareholders. But a new management team locked him out of the company where his name once was emblazoned across conference rooms and buildings. The board pushed him aside and voided his employment contract shortly after FBI agents raided the Alabama company's headquarters in March 2003.
Citing the board's refusal to turn over documents or invite him to meetings, Scrushy resigned yesterday as a HealthSouth director for what he called "good reason." At the same time, he asked the Securities and Exchange Commission for permission to amend the company's proxy statement. Scrushy said he wants to increase the board's size and promote one or two of his own candidates as potential directors at the next shareholder meeting, Dec. 29.
"Regardless of what anyone says, I want the best for HealthSouth," Scrushy said in a news release.
Last week, a federal judge dropped two civil fraud charges filed against Scrushy by the SEC. Four other charges remain in the SEC's civil case, which is scheduled for trial in April 2007. Scrushy also faces criminal charges over financial contributions the company made to a drive by former Alabama governor Don Siegelman to retire debt related to the state lottery. Both men have pleaded not guilty.
Scrushy founded HealthSouth in 1984 and ran it as the company gobbled up rivals across the country. But it became harder to meet earnings targets. In early 2003, corporate finance officials blew the whistle on accounting fraud to prosecutors.
In all, 15 HealthSouth executives pleaded guilty to crimes. Former controller Hannibal "Sonny" Crumpler, the second official after Scrushy to take his case to trial, was convicted last month of conspiracy and lying to auditors. Onetime finance chief William T. Owens, who pleaded guilty and made secret audiotapes of Scrushy, faces sentencing Friday on charges of conspiracy and false certification of financial statements.
At his criminal trial earlier this year, Scrushy cultivated local clergy and blamed the fraud on deceitful subordinates. He has continued to criticize the business acumen of the executives who took his place at HealthSouth. Last week, the company reported in a delayed filing that it had lost 44 cents per share in 2004.
HealthSouth spokesman Andy Brimmer said the company was "pleased Mr. Scrushy has complied with our numerous requests for him to resign from the board. This is an appropriate and long overdue decision."
Charles Russell, a representative for Scrushy, said he could not put a dollar figure on the amount of pay and benefits Scrushy is seeking.
"We have not seen the end of Richard Scrushy," Russell said in a telephone interview.