The Alabama State Supreme Court has upheld a 2009 ruling that Richard Scrushy, founder and former CEO of HealthSouth, must pay $2.8 billion to shareholders over accusations of fraud.
Scrushy faced a criminal trial in 2005 on charges of defrauding shareholders in the organization, which runs rehabilitation facilities across the nation. He was acquitted of those charges, but in a civil case, Alabama Judge Allwin Horn found him responsible for fraud and ordered that he pay nearly $3 billion to shareholders.
Scrushy’s lawyers have asked the Alabama State Supreme Court to reconsider its January ruling. John Somerville, a lawyer representing the HealthSouth shareholders, said the filing doesn’t raise any new issues, and he has filed a response with the court.
Somerville said about $100 million of the $2.8 billion has been collected. “We think we have been successful at getting the property we know about,” he said. “We’re still in the process of selling assets.”
Shareholders recently reached an agreement with Scrushy’s wife about some of those assets. “She was able to keep a modest amount of money to live on,” said Somerville. “We didn’t want to leave her without any means of support.”
Scrushy is in federal prison in Texas serving a sentence of nearly seven years for his conviction of bribery, conspiracy and mail fraud. He may have a chance at getting his conviction overturned. In June 2010, the U.S. Supreme Court ordered a lower appeals court to review his case in light of a ruling of the higher court in the case of Enron chief Jeff Skilling.
The federal case has no bearing on the HealthSouth civil case, Somerville said. “The trial court held that Richard Scrushy committed a $3 billion fraud,” he said. “Our job is to collect that money.”
Scrushy’s lawyers did not reply to a request for comment.