Healthsouth Corp

HealthSouth Corp., the hospital company accused of $2.5 billion in accounting fraud, said that it might be able to avoid seeking Bankruptcy Court protection and asked its creditors to be patient. "With another 90 to 120 days ... we think our company has an awful good chance of avoiding bankruptcy," HealthSouth Chairman Joel Gordon said. HealthSouth defaulted on bond payments and a bank loan agreement following U.S. allegations in March that the Birmingham, Ala.

Lawmakers looking into an accounting scandal at clinic and surgical center operator HealthSouth Corp. asked a former U.S. executive at Swiss bank UBS to turn over documents related to the company. House Energy and Commerce Committee Chairman W.J. "Billy" Tauzin (R-La.) and ranking Democrat John D. Dingell of Michigan said they had sent a letter to Howard Capek, who directed research on HealthSouth for many years at unit UBS Warburg.

HealthSouth Corp. said it paid $8.2 million to settle claims it overcharged Medicare in a deal involving a company owned by the parents of Chief Executive Richard M. Scrushy. The agreement ended a Justice Department lawsuit over the way the Birmingham, Ala.-based rehabilitation company accounted for a series of deals from 1992 through 1997.

A former HealthSouth Corp. chief financial officer was sentenced to six months of house arrest for his part in a multibillion-dollar accounting scandal at the chain of clinics. U.S. District Judge U.W. Clemon in Birmingham, Ala., also gave Malcolm "Tadd" McVay five years of probation, fined him $10,000 and ordered him to forfeit $50,000 in ill-gotten gains.

HealthSouth Corp. agreed to remove five directors to settle an investor lawsuit stemming from charges of $2.7 billion in accounting fraud. The Louisiana Teachers' Retirement System will drop its demand for an immediate shareholder meeting to remove fired Chief Executive Richard Scrushy and five of his colleagues from the board, said Stuart Grant, the fund's lawyer. In exchange, five directors will resign in the next eight months, he said.

HealthSouth Corp. restated its finances for the final years of a huge fraud and said that it hoped to be current on its financial statements by the end of 2005. In a 170-page filing with the Securities and Exchange Commission that included an additional 114 pages of notes, HealthSouth said actual revenue in 2000 and 2001 was $7.1 billion -- about $1.5 billion less than previously reported.

HealthSouth Corp.'s third-quarter profit dropped 32% as costs rose and the government reduced Medicare payments to the biggest U.S. operator of rehabilitation hospitals. Chairman Richard Scrushy told investors he would cut expenses to make up for less income from Medicare for outpatient therapy. Scrushy is facing Securities and Exchange Commission probes into share sales and whether the firm waited too long to tell investors about payment changes, which have triggered a 66% decline in the stock.

A former HealthSouth Corp. vice president admitted lying to auditors about the value of an investment, becoming the 14th executive to plead guilty in an accounting fraud that prosecutors say will exceed $2.5 billion. Will Hicks admitted telling auditors that HealthSouth had a $13-million stake in assisted-living facilities that he knew was worthless. All who pleaded guilty are helping prosecutors investigate former Chief Executive Richard Scrushy. HealthSouth, which owes more than $3.

A former HealthSouth Corp. vice president testified that he signed a false loan document after founder Richard Scrushy screamed at him in anger for discussing "fabricated earnings" at the company in 1999. Leif Murphy, 36, had testified for prosecutors that Scrushy, who is on trial in U.S. District Court in Birmingham, Ala., for his role in a $2.

A HealthSouth Corp. executive suspected financial wrongdoing as early as 1998, but her superiors dismissed her concerns, according to testimony Tuesday in the fraud trial of fired Chief Executive Richard Scrushy. Scrushy, who is being tried in federal court in Birmingham, Ala., is accused of conspiracy to overstate earnings by about $2.7 billion.