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Former HealthSouth Boss Indicted

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Former HealthSouth Corp. head Richard Scrushy has been indicted on 85 counts in a massive federal fraud case that already has seen 15 former executives of the rehabilitation services giant plead guilty.

The indictment, dated Oct. 29 and released Tuesday at the federal courthouse, accuses Scrushy of a range of criminal violations including securities fraud and false certification of corporate statements.

Scrushy attorney Donald Watkins said the HealthSouth co-founder and former chief executive officer will plead innocent. Watkins said Scrushy was being processed by federal marshals in Birmingham on the charges.

He declined to comment on the 85-count indictment. "There's a whole group of lawyers studying it," Watkins said.

The Justice Department scheduled a news conference Tuesday morning in Washington to discuss the case.

Fifteen former HealthSouth employees, including all five chief financial officers, already have pleaded guilty to criminal fraud charges since the Justice Department investigation began in March.

The government contends that Scrushy and HealthSouth inflated company earnings by at least $2.5 billion to make it appear the company was meeting expectations of Wall Street analysts. Scrushy has blamed the fraud on others in the company.

Three of Scrushy's lawyers — Johnathan Rose, Tom Sjoblom and Richard Dean — left a meeting at the U.S. attorney's office in Birmingham at about 8 p.m. Monday. Scrushy's attorneys have said previously they expected him to be indicted.

A federal court official in Birmingham, speaking on condition of anonymity, said a grand jury heard evidence last week from witnesses, including some of the former HealthSouth executives who have pleaded guilty.

At a recent congressional hearing, several current and former HealthSouth employees said Scrushy knew about efforts to massage company accounts to meet earnings forecasts. Scrushy invoked his Fifth Amendment's protection against self-incrimination when he testified in October before the same House committee.

HealthSouth and Scrushy already have been charged with fraud in a civil lawsuit by the Securities and Exchange Commission.

Birmingham-based HealthSouth, founded by Scrushy in 1984, is the largest U.S. provider of outpatient surgery, diagnostic imaging and rehabilitation services. The company has some 50,000 employees and about 1,700 sites in all 50 states and overseas.

The flamboyant recently proclaimed his innocence in an interview on CBS News' "60 Minutes," saying he signed off on the fraudulent accounting figures because he trusted the five chief financial officers of the company he helped found in 1984.

Asked by 60 Minutes Correspondent Mike Wallace if he inflated earnings and betrayed his stockholders and employees, Scrushy said: "There's no evidence of any of that. And many, what the people have said is not true."