scion
16 years ago
Ex-Chief of HealthSouth Loses Civil Suit
June 19, 2009
By JACK HEALY
http://www.nytimes.com/2009/06/19/business/19scrushy.html?_r=1&partner=rss&emc=rss
Four years ago, Richard M. Scrushy, the former chief executive of HealthSouth, walked out of a federal courthouse in Alabama and thanked God that he had been acquitted of criminal charges that he defrauded the company. But on Thursday, a state judge still found Mr. Scrushy responsible for the fraud and ordered him to pay $2.9 billion to the company's shareholders.
In his decision, the judge, Allwin E. Horn, declared that Mr. Scrushy knew about and took part in concocting false financial statements that inflated HealthSouth's earnings to meet Wall Street's expectations and to buoy the stock.
The fraud ran for seven years, totaled $2.7 billion and was "remarkable and perhaps unique" in its size and scope, the judge wrote.
"Scrushy was the C.E.O. of the fraud," Judge Horn wrote.
The ruling was a coda on an era of scandals at companies like Enron, WorldCom, Tyco International and ImClone.
"This is the last chapter in the great epic drama of major corporate scandals that we saw in the last 10 years," said Robert J. Mintz, a former federal prosecutor who followed Mr. Scrushy's criminal trial. "It in some ways closes the book on the wave of unprecedented corporate fraud we saw. This one has dragged out even longer than Enron."
For prosecutors who failed to win a conviction of Mr. Scrushy and shareholders whose HealthSouth shares crumbled after the fraud was unmasked, the judge's decision offered a belated, if anticlimactic, vindication.
"He was the orchestrator of this fraud," said Alice H. Martin, the United States attorney who unsuccessfully prosecuted Mr. Scrushy on 36 criminal counts. Ms. Martin is retiring on Friday. "That's what I'm calling my retirement gift."
While Mr. Scrushy's criminal trial in 2005 was a five-month drama that fascinated many in Alabama and drew throngs of reporters to the courtroom, this civil trial was a quieter proceeding. It lasted two weeks and was decided by a judge, and Mr. Scrushy was often not even present.
Mr. Scrushy had already been sentenced to nearly seven years in prison for bribing a former governor of Alabama, and he spent much of the civil trial in a holding cell away from the courtroom, lawyers said. He appeared in court only to testify in his own defense.
Lawyers said the judgment was the first time that Mr. Scrushy had been found liable in any courtroom for his actions at HealthSouth, which operates dozens of rehabilitation clinics and hospitals across the country. He has already been ordered to pay fines and to repay millions of dollars in bonuses. Several other executives of HealthSouth have been convicted in the case.
Mr. Scrushy has maintained his innocence and has said he knew nothing about the fraud. His lawyers did not return calls for comment on Thursday, but other lawyers connected to the case said they expected Mr. Scrushy to appeal. He is appealing his criminal conviction in the bribery case.
Lawyers for HealthSouth and shareholders said they were poised to go after Mr. Scrushy's assets, but it is doubtful they will ever squeeze anything close to $2.9 billion from him. Mr. Scrushy has sold his shares of HealthSouth -- which closed at $13.02 on Thursday -- and was estimated to have $275 million in assets in 2005, said John Haley, a lawyer for shareholders.
"The only thing that remains now is collecting on it," said Donald Q. Cochran, a law professor at Samford University in Birmingham, Ala.
http://www.nytimes.com/2009/06/19/business/19scrushy.html?_r=1&partner=rss&emc=rss
creede
18 years ago
Hey, check this out.
To: Creede Bighorns who wrote (272) 10/18/2006 8:37:29 PM
From: WR61499 Read Replies (1) of 274
One of your first Flamingo stocks is all grown up now and ready to fly on its own!
AP
HealthSouth Rejoining NYSE
Wednesday October 18, 12:19 pm ET
HealthSouth to Rejoin New York Stock Exchange Next Week
BIRMINGHAM, Ala. (AP) -- Medical services provider HealthSouth Corp. said Wednesday it would rejoin the New York Stock Exchange next week, 3 1/2 years after it was delisted amid revelations of a $2.7 billion accounting fraud.
ADVERTISEMENT
Shares of HealthSouth, which have been traded over the counter, will resume trading on the exchange on Oct. 26, according to a statement by Chairman Jon Hanson.
The Birmingham-based company released Hanson's remarks ahead of a meeting in which shareholders were scheduled to vote on a reverse stock split aimed at boosting share prices.
HealthSouth stock fell 8 cents to $5.20 a share in midday over-the-counter trading.
HealthSouth, which grew into a huge rehabilitation chain but is realigning its business to concentrate on post-acute care, is moving ahead with the planned divesture of its outpatient rehabilitation division, its diagnostic division and its surgical centers, Hanson said.
"All these developments represent significant milestones in HealthSouth's recovery and is a powerful symbol of the progress we have made as a company," said Hanson's statement.
Fifteen former HealthSouth executives pleaded guilty in the fraud, and jurors convicted a 16th in a trial. Fired chief executive Richard Scrushy was acquitted in the scheme, but he was later convicted in a separate government bribery scheme linked to his years at HealthSouth.
sllabxam
18 years ago
See FULL STORY: http://www.al.com/news/birminghamnews/index.ssf?/base/news/115554695586160.xml&coll=2
HealthSouth announces plan for restructuring
Monday, August 14, 2006
MICHAEL TOMBERLIN
News staff writer
HealthSouth Corp. will jettison three of its four operating divisions to become exclusively an inpatient rehabilitation company with greater growth prospects.
The new company will retain the HealthSouth name and plans to be publicly traded on the New York Stock Exchange by the end of October, with the ticker symbol "HLS." A one-for-five reverse stock split should also be completed prior to re-listing, the company will announce today.
Investors will exchange five shares of HealthSouth stock to receive one share of higher value. The company plans to hold a shareholders meeting in Birmingham soon to approve the reverse split.
The company previously has said it is exploring the sale or spinoff of its diagnostic division with Deutsche Bank.
Now the outpatient rehabilitation and surgery center divisions are also on the block, with Goldman, Sachs & Co. handling the sale or possible spinoff of those divisions.
The moves are designed to reposition HealthSouth for profitability while cutting into its debt, Jay Grinney, chief executive at HealthSouth, said in an interview with The Birmingham News.
"The growth prospects in the post-acute arena were significant, but because of our debt load we were unable to pursue those as well as pursue development opportunities in our other sectors," Grinney said.
HealthSouth's decision to retain inpatient rehabilitation was an easy one, Grinney said, given its dominance in that segment. In the second quarter of this year, the inpatient business accounted for 57.9 percent of its revenues and 86 percent of its earnings.
Inpatient has 202 facilities with 23,700 employees, 68 percent of all HealthSouth clinical employees. The majority of the 800 corporation jobs also would stay with the new HealthSouth.
"It's our largest division. It's also responsible for generating a substantial portion of our cash flow," he said. "It has tremendous growth opportunities associated with it. We've been very pleasantly surprised at how many of those opportunities are out there."
The surgery center business is the second largest division, based on the most recent quarterly earnings report, with 24.5 percent of revenues and 18.1 percent of earnings. There are 153 surgery centers with 6,400 employees.
The outpatient rehabilitation business makes up 11 percent of revenues and 6.8 percent of earnings with 606 facilities and 3,500 employees.
The diagnostic division contributed 6.6 percent of revenues and a 10.9 percent loss in the second quarter. There are 76 of those facilities with 1,260 employees.
The corporate headquarters has five facilities with 800 employees, a portion of which deal exclusively with the various divisions.
Grinney said he is not sure why the various divisions existed under HealthSouth because they have little in common and lack synergy. Each has different patients, referral sources, payors, such as Medicare and insurance companies, and information systems, making it difficult to consolidate operations.
HealthSouth will report today it had an operating loss of $28.9 million in the second quarter of this year, a $17 million improvement over the loss it reported the same period a year ago. A 3.8 percent drop in revenues was attributed largely to the impact of the much-talked-about 75 percent rule that reduces Medicare payments to inpatient rehabilitation facilities based on a set formula. Other factors included the closing of facilities and the reclassification of some surgery centers, the company said.
Most of the proceeds from the sale of the three divisions would be used to trim HealthSouth's $3.4 billion debt load, which currently equals more than six times the company's pretax earnings. A more common ratio in the health care industry is three- to four-times earnings, a threshold HealthSouth aims to be below in five years, according to John Workman, HealthSouth's chief financial officer.
Four companies?
The shedding of the divisions could come in the form of a sale to an existing company or could be a spinoff with independent financial backing or possibly through a separate public stock offering. Grinney said it is possible Birmingham could end up with four separate health care company where it currently has one.
"It gives us the opportunity to deleverage, but it also gives the Birmingham business community the opportunity to foster and encourage and see growth in potentially three new businesses," he said. "Each one of those, then, has the potential for growing, expanding and investing in their respective areas. That could be a very good move for Birmingham."
Grinney said the companies are ready to stand up on their own with relative ease.
"The one thing that we're very pleased with is the fact that we have assembled very strong, top-notch senior management talent in each of these divisions. Each of them is capable to taking their respective divisions and leading them in a spinoff type of environment," he added. "Because of the complexity of our ambulatory surgery division, the fact that it is a much larger division, Mike Snow, our chief operating officer, would take that division out along with Joe Clark and the senior management team that they've put together."
Workman envisions as much potential for an investor purchase of the divisions as he does for a competitor coming in and buying an entire operation.
"I think all of these have a fairly high likelihood of being separate stand-alone businesses. There is a lot of private equity money out there today, and we think there will be a lot of interest there in addition to the split-off or spinoff scenarios," Workman said. "We think it's more likely to be a financial buyer in surgery centers. In outpatient it's got chances either way. In diagnostic it will more likely be a financial buyer as well."
All four companies could possibly be on the current HealthSouth campus with the reconfiguration of the offices there.
Grinney said the spinoff or sale of the division may take more than a year to complete.
"If we can move faster, we will," he said. "We don't want to drag this out any longer than we have to."
Back on Big Board
The decision to go back on the New York Stock Exchange came after discussions with NASDAQ and NYSE.
"Both exchanges expressed a strong interest in having us listed on their exchange," Grinney said. "In the final analysis, the board believed it was important to go back to the New York Stock Exchange. It really will signal a final step in the rehabilitation of the company."
The company was listed on the Big Board from the time it went public in 1986 until it was dropped from the exchange in the wake of a $2.6 billion financial fraud that came to light in March 2003.
However, then it was listed under the "HRC" symbol. That needed to be changed, Grinney said.
"It was clearly important to have a different symbol because we are such a different company," he said.
The reverse stock split is meant to reduce the 398.24 million shares of HealthSouth that are now traded to approximately 80 million, which is more consistent with a health care company of HealthSouth's size, Workman said.
Whereas one share today trades at $4.10 based on Friday's closing price, after the reverse split, five shares will be converted into one with a value of $20.50.
The move also aims to lift the share price out of single-digit trading, where it had been even before the fraud was disclosed. It should attract institutional investors and other would-be traders who currently do not pursue companies with share prices as low as HealthSouth's.
The reverse split should also reduce transaction costs for investors due to fewer shares being traded. Announcements related to per-share earnings would also be more impressive when spread out among fewer shares.
Keeping its name
Though the financial fraud has taken a toll on the company's earnings as it struggled to clean up its finances and pay legal settlements, it apparently has not done significant damage to the HealthSouth name among the general public. The company's research into whether it should change the name has revealed there is no need to go through such a costly undertaking.
"The name HealthSouth is synonymous with high quality health care and particularly high quality rehabilitative care," Grinney said. "The name really wasn't tarnished in the local communities. In Birmingham it was."
The costs associated with a name change, even to do basic tasks like change signs and letterheads, would have been enormous.
"It would have been at least a $20 million investment at a time when we don't exactly have $20 million lying around," Grinney said. "There was such brand equity, particularly in rehabilitative care, that it made sense to keep that part of the legacy."
As has become common for the company during a major announcement, Grinney reiterated HealthSouth will remain based in Birmingham.
"We do that primarily for the rabble-rousers and the convicted felons out there trying to mislead the public about our intentions," Grinney said. "Clearly we have absolutely no desire to move."
Platina
18 years ago
You can say that again, what a mess Yahoo has made of their format.
Loved this posters expression of his dissatifaction LOL :
Hi, I am the Project Manager for the new Yahoo Message Boards. I just wanted to let you all know that we will be adding even more new features to the stunning new boards next week:
1) Starting next Monday, all new posts will automatically be translated into Norwegian. Our Yahoo Finance development team decided that users would want this, and since we do not speak directly to users before updating our site, we will assume this is a highly desired feature. The brilliant Stanford Ph.D.'s we hired to update the site thought it would be cool! Due to disk storage issues, we regret that we will no longer be able to offer your posts in English. Please learn Norwegian, and let us know how it goes on our Feedback form! We read every form you send us!
2) As you know, we recently stopped listing stock board posts chronologically, and went to a thread-based system. We feel that stock investors do not need to clearly see the latest posts in chronological order, during the trading day, and our Ph.D. geniuses from Stanford think you would prefer to dig through threads to find old posts on your stocks. More importantly, later this month, we will be removing the dates and times from all posts, and then in September we plan to mix them all up randomly. We hope that you are not inconvenienced by reading 8 year old posts when making investment decisions. Please use the helpful Feedback form to let us know what you think. We read every one!
3) As you may know, in the Beta we switched from a simple and effective system of "recommending" posts with a click, to a more complex one in which you rate posts with stars. Of course, you can only see the number of stars for the first post in a thread, but we feel this is better even if no one ever uses it. Our Ph.D. developers informed us that "complex" equals "better". So next month, we will replace the star system with a new even more complex one, in which you will manually calculate the cube root of how much you like the post on a scale of 3.4 to 11, and then divide by pi. Please let us know what you think on the Feedback form, which next month will only accept entries in Hexadecimal. We read every post.
Finally, just to get you excited and build some anticipation, I wanted to let you know that our Ph.D.'s are working on a new feature for 2007. Posts will be automatically scanned for keywords by our cool super-complex search technology, to determine if they would be better suited to a different stock board, and if so, they will be automatically moved. We feel the slight inconvenience of having posts moved around by the system will be outweighed by how cool the technology is!
Regards,
http://messages.finance.yahoo.com/Healthcare/Healthcare_Facilities/threadview?m=tm&bn=8761&t...
sllabxam
19 years ago
HealthSouth Corporation Prices Convertible Perpetual Preferred Stock
Tuesday February 28, 6:52 pm ET
BIRMINGHAM, Ala., Feb. 28 /PRNewswire-FirstCall/ -- HealthSouth Corporation (OTC Pink Sheets: HLSH - News) priced $400 million of convertible perpetual preferred stock through a private placement to qualified institutional buyers.
Shares of the preferred stock will be convertible into the Company's common stock at an initial conversion price of $6.10 per share. Holders of preferred stock will generally be entitled to receive dividends at the rate of 6.5% per year, payable quarterly. The Company expects this transaction to close on or about March 7, 2006.
The purpose of the preferred stock issuance is to reduce HealthSouth's outstanding indebtedness. If HealthSouth successfully completes its previously announced recapitalization transactions, the amount of senior unsecured interim term loans HealthSouth will be permitted to borrow in connection with the recapitalization transactions will be reduced by the amount of gross proceeds that HealthSouth receives from the preferred stock issuance. If the recapitalization transactions are not completed, HealthSouth will use the net proceeds that it receives from the preferred stock issuance to repay a portion of its outstanding senior unsecured indebtedness.
The convertible perpetual preferred stock and the underlying common stock issuable upon conversion have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This news release does not constitute an offer to sell, or solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering would be unlawful.
EricM
19 years ago
This newspaper article mentions Healthsouth. Have you read it yet? Published today!
COMPANY NEWS AND PRESS RELEASES FROM OTHER SOURCES:
The Dominion Post, Morgantown, W.Va., Local Briefs column
Feb 04, 2006 (The Dominion Post - Knight Ridder/Tribune Business News via COMTEX) -- Police await transport of murder suspect Local authorities are waiting to find out when Hason K. Cleveland, 27, charged with the murder of a Morgantown woman, will be released to West Virginia police by New York officials. Cleveland is the third personthree people charged in connection with the Jan. 1 death of Ebony Nicole Brown, 24, a New Jersey native living in Morgantown. State Police Sgt. D.E. Johnson said Friday Cleveland's return to West Virginia will be the next major step in the investigation. Cleveland, a Jamaica, N.Y., resident, had been living in Morgantown but was arrested in a Queens, N.Y., apartment by members of the U.S. Marshal's Fugitive Task Force. He is being held in Queens pending an extradition hearing. Brown was killed Jan. 1 and buried in a shallow grave behind a house at 42 1/2 Snowy Road on Chaplin Hill. Her body was found Jan. 24 by state police officers following up on information they had received. In addition to Cleveland, police have arrested two other suspects in the murder: Danielle Taureane Hilling, 23, of Sabraton, and her sister, Nina Jefferson, 27, of Morgantown. Anyone with information about the homicide is asked to contact State Police at 285-3200. Radio U92 off air for tech problem If you've tuned into WVU's WWVU FM 92 in the last few days, you're probably wondering where the radio station went. According to station manager Kim Williams, the student-run radio station is experiencing transmitter problems which she hopes to have repaired by early next week. The station has been off the air since Wednesday, she said. But Williams assured listeners the station is "still up on the Internet." To listen, log on to http://u92.wvu.edu. Sago mine survivor McCloy Jr. still improving Randal McCloy continues to progress through rehabilitation at HealthSouth Mountainview Regional Rehabilitation Hospital, according to his family. McCloy is still unable to speak, but has shown signs of attempting to articulate words and has demonstrated increased alertness and other neurological improvements. Earlier this week, with the assistance of his wife, Anna McCloy, McCloy ate a full breakfast. Throughout the week he increased his food intake, with assistance, up to two to three meals per day. McCloy was transferred from WVU Hospitals to HealthSouth late last week.
Copyright
(c) 2006, The Dominion Post, Morgantown, W.Va.
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