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04-03-2003, 08:24 AM
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"...HealthSouth's charismatic founder cultivated a large "family" of executives at many levels to cook the books -- and play in his band. As many as five HealthSouth officials are expected to reach plea agreements with federal prosecutors in Alabama..."
BTW, I am a disgruntled ex-investor with and axe to grind...I lost quite a bit of money on this stock a couple of years ago...
"...HealthSouth's charismatic founder cultivated a large "family" of executives at many levels to cook the books -- and play in his band. As many as five HealthSouth officials are expected to reach plea agreements with federal prosecutors in Alabama..."
BTW, I am a disgruntled ex-investor with and axe to grind...I lost quite a bit of money on this stock a couple of years ago...
Last edited by Sean; 04-03-2003 at 08:28 AM.
04-03-2003, 08:25 AM
#7
Is this it?
HealthSouth Founder Cultivated Loyalty
HealthSouth's charismatic founder cultivated a large "family" of executives at many levels to cook the books -- and play in his band. As many as five HealthSouth officials are expected to reach plea agreements with federal prosecutors in Alabama.
HealthSouth's charismatic founder cultivated a large "family" of executives at many levels to cook the books -- and play in his band. As many as five HealthSouth officials are expected to reach plea agreements with federal prosecutors in Alabama.
04-03-2003, 08:37 AM
#9
http://seattletimes.nwsource.com/htm...thsouth01.html
Embattled Health South fires CEO, auditing firm
By Seattle Times news services
AP
Emery Harris, Health South vice president of finance, leaves court yesterday after pleading guilty in the accounting scandal.
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BIRMINGHAM, Ala. — HealthSouth dismissed Richard Scrushy as chairman and chief executive yesterday, severing ties with the company's founder as a third executive agreed to plead guilty in a mushrooming accounting scandal.
The company said Scrushy, who built HealthSouth into a leading health-care chain, also was being asked to resign from the board.
In a further bid to wipe clean its slate, HealthSouth said it would fire longtime outside auditor Ernst & Young. The latter has said it is cooperating in a federal investigation of the company, which allegedly created false financial statements and entries to deceive auditors.
A spokesman for Ernst & Young did not return phone calls seeking comment. Neither did two attorneys representing Scrushy.
The government filed a civil lawsuit this month accusing HealthSouth and Scrushy of overstating earnings by at least $1.4 billion since 1999 to make it appear the company was meeting Wall Street expectations.
As the company announced Scrushy's ouster, federal prosecutors said Emery Harris, 33, vice president of finance and assistant controller of HealthSouth, agreed to plead guilty to charges including conspiracy to commit wire and securities fraud and falsifying financial information in annual statements to regulators.
The Justice Department said Harris and others on HealthSouth's accounting staff held what were known as "family" meetings to inflate earnings.
"At the meetings, they would discuss ways by which members of the accounting staff would falsify HealthSouth's books to fill the 'gap' or 'hole' and meet the desired earnings. The fraudulent postings used to fill the 'hole' were referred to as the 'dirt,' " the Justice Department statement said.
Scrushy's lawyers have filed papers saying he is the target of a federal criminal investigation, and two former chief financial officers have pleaded guilty to fraud and are cooperating with authorities.
More HealthSouth executives are expected to admit guilt this week in plea-bargain agreements, U.S. Attorney Alice Martin said.
The company said Scrushy's dismissal was retroactive to March 19, when he was placed on leave as the accounting scandal broke.
Scrushy could be forced to repay any bonuses and extra compensation based on overstated profits should the company be forced to restate its earnings, the company told him in a letter Sunday.
Scrushy has not responded to the request for his resignation from the board.
While lenders blocked the company from paying $367 million in bond and interest debt due today, moving the company closer to possible bankruptcy, spokesman Ernie Knewitz said HealthSouth is still able to pay bills for day-to-day medical operations.
"Vendors obviously are calling expressing concern, but we are assuring them we are paying," he said. "We are operating without disrupting patient-care services."
Based in Birmingham, Ala., HealthSouth calls itself the largest U.S. provider of diagnostic imaging, outpatient surgery and rehabilitation services. The company has almost 1,700 locations in all 50 states and abroad.
But the company will start to lose business because of the scandal, doctors and investors said.
Aetna, which insures 14 million health-plan members in the United States, said it's reconsidering agreements with HealthSouth.
Cigna, the No. 3 U.S. insurer after UnitedHealth Group and Aetna, said it's carefully monitoring developments.
"Headlines like this do impact referrals," said Tom Eck, a fund manager for U.S. Bancorp, which he said has a "small position" in HealthSouth and held 1.3 million shares in December, according to a regulatory filing. "We've seen this before. It will affect the business."
HealthSouth gets patients through contracts with insurers and employers. It also depends on doctors to send patients to its network of 1,700 physical-therapy and outpatient clinics.
Referrals to clinics fell by about 11,000 in the third quarter after HealthSouth in August surprised investors by saying Medicare cuts would hurt profit. HealthSouth reported about 2 million outpatient rehabilitation visits in the quarter.
The disclosure about Medicare sparked an SEC probe into whether HealthSouth waited too long to tell investors. U.S. regulators now say executives might have exaggerated the effect to make up for previously inflated profit.
The inspector general for the Health and Human Services Department has been investigating HealthSouth on several issues related to Medicare, a spokeswoman said. The office can halt Medicare reimbursements.
Analysts and investors have also raised concern about HealthSouth's $1.16 billion in leases. Healthcare Realty Trust, which holds leases on 27 properties, said it's structured 23 in such a way that it can declare HealthSouth in violation on all of them if a payment is missed on one.
"There will be asset sales," said Tom Goetzinger, a Morningstar analyst. "HealthSouth needs cash."
Selling assets may be difficult because one-third of U.S. hospitals are operating with losses. "It's possible they won't find a buyer," said American Hospital Association spokesman Rick Wade. "It's not in anyone's best interest to be in a community where a health-care provider is in jeopardy."
The New York Stock Exchange suspended trading in HealthSouth shares yesterday and wants to delist the company. The company's stock sold for about 8 cents a share in over-the-counter trading yesterday morning, down from a high of more than $30 a share five years ago.
Copyright © 2003 The Seattle Times Company
More business & technology
Embattled Health South fires CEO, auditing firm
By Seattle Times news services
AP
Emery Harris, Health South vice president of finance, leaves court yesterday after pleading guilty in the accounting scandal.
E-mail this article
Print this article
Search web archive
BIRMINGHAM, Ala. — HealthSouth dismissed Richard Scrushy as chairman and chief executive yesterday, severing ties with the company's founder as a third executive agreed to plead guilty in a mushrooming accounting scandal.
The company said Scrushy, who built HealthSouth into a leading health-care chain, also was being asked to resign from the board.
In a further bid to wipe clean its slate, HealthSouth said it would fire longtime outside auditor Ernst & Young. The latter has said it is cooperating in a federal investigation of the company, which allegedly created false financial statements and entries to deceive auditors.
A spokesman for Ernst & Young did not return phone calls seeking comment. Neither did two attorneys representing Scrushy.
The government filed a civil lawsuit this month accusing HealthSouth and Scrushy of overstating earnings by at least $1.4 billion since 1999 to make it appear the company was meeting Wall Street expectations.
As the company announced Scrushy's ouster, federal prosecutors said Emery Harris, 33, vice president of finance and assistant controller of HealthSouth, agreed to plead guilty to charges including conspiracy to commit wire and securities fraud and falsifying financial information in annual statements to regulators.
The Justice Department said Harris and others on HealthSouth's accounting staff held what were known as "family" meetings to inflate earnings.
"At the meetings, they would discuss ways by which members of the accounting staff would falsify HealthSouth's books to fill the 'gap' or 'hole' and meet the desired earnings. The fraudulent postings used to fill the 'hole' were referred to as the 'dirt,' " the Justice Department statement said.
Scrushy's lawyers have filed papers saying he is the target of a federal criminal investigation, and two former chief financial officers have pleaded guilty to fraud and are cooperating with authorities.
More HealthSouth executives are expected to admit guilt this week in plea-bargain agreements, U.S. Attorney Alice Martin said.
The company said Scrushy's dismissal was retroactive to March 19, when he was placed on leave as the accounting scandal broke.
Scrushy could be forced to repay any bonuses and extra compensation based on overstated profits should the company be forced to restate its earnings, the company told him in a letter Sunday.
Scrushy has not responded to the request for his resignation from the board.
While lenders blocked the company from paying $367 million in bond and interest debt due today, moving the company closer to possible bankruptcy, spokesman Ernie Knewitz said HealthSouth is still able to pay bills for day-to-day medical operations.
"Vendors obviously are calling expressing concern, but we are assuring them we are paying," he said. "We are operating without disrupting patient-care services."
Based in Birmingham, Ala., HealthSouth calls itself the largest U.S. provider of diagnostic imaging, outpatient surgery and rehabilitation services. The company has almost 1,700 locations in all 50 states and abroad.
But the company will start to lose business because of the scandal, doctors and investors said.
Aetna, which insures 14 million health-plan members in the United States, said it's reconsidering agreements with HealthSouth.
Cigna, the No. 3 U.S. insurer after UnitedHealth Group and Aetna, said it's carefully monitoring developments.
"Headlines like this do impact referrals," said Tom Eck, a fund manager for U.S. Bancorp, which he said has a "small position" in HealthSouth and held 1.3 million shares in December, according to a regulatory filing. "We've seen this before. It will affect the business."
HealthSouth gets patients through contracts with insurers and employers. It also depends on doctors to send patients to its network of 1,700 physical-therapy and outpatient clinics.
Referrals to clinics fell by about 11,000 in the third quarter after HealthSouth in August surprised investors by saying Medicare cuts would hurt profit. HealthSouth reported about 2 million outpatient rehabilitation visits in the quarter.
The disclosure about Medicare sparked an SEC probe into whether HealthSouth waited too long to tell investors. U.S. regulators now say executives might have exaggerated the effect to make up for previously inflated profit.
The inspector general for the Health and Human Services Department has been investigating HealthSouth on several issues related to Medicare, a spokeswoman said. The office can halt Medicare reimbursements.
Analysts and investors have also raised concern about HealthSouth's $1.16 billion in leases. Healthcare Realty Trust, which holds leases on 27 properties, said it's structured 23 in such a way that it can declare HealthSouth in violation on all of them if a payment is missed on one.
"There will be asset sales," said Tom Goetzinger, a Morningstar analyst. "HealthSouth needs cash."
Selling assets may be difficult because one-third of U.S. hospitals are operating with losses. "It's possible they won't find a buyer," said American Hospital Association spokesman Rick Wade. "It's not in anyone's best interest to be in a community where a health-care provider is in jeopardy."
The New York Stock Exchange suspended trading in HealthSouth shares yesterday and wants to delist the company. The company's stock sold for about 8 cents a share in over-the-counter trading yesterday morning, down from a high of more than $30 a share five years ago.
Copyright © 2003 The Seattle Times Company
More business & technology
