Sacked HealthSouth chief seeks $70m for wrongful dismissal

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The Independent Online

Richard Scrushy, the colourful founder of the hospitals operator HealthSouth who was found not guilty of multiple charges of fraud, is suing the company for $70m (£40m), claiming he was wrongfully fired as chief executive in 2003.

Mr Scrushy is suing for lost earnings and benefits after a jury in Birmingham, Alabama, ruled in June he did not commit multiple counts of fraud, money-laundering and conspiracy despite the fact that several of the company's former executives testified against him. During the trial, Mr Scrushy, a native of Alabama, preached regularly at churches in the Birmingham area and hosted a daily cable television show.

While Mr Scrushy insisted his faith was sincere and his sermons were not an attempt to influence the court proceedings, his religious stance is likely to have played well in Birmingham, which is in the middle of America's Bible Belt. He still faces civil charges brought by the Securities and Exchange Commission. The trial is not due to begin until April 2007.

HealthSouth was dragged to the brink of bankruptcy by allegations of widescale fraud. The company fired Mr Scrushy as chief executive but he remained a director until this month, when he announced he was quitting the board.

In his resignation letter, he said the company had denied him the powers, authority, duties and responsibilities usually attached to the position of director.

Mr Scrushy's lawyer said yesterday HealthSouth had unfairly fired him because he had done nothing wrong. Art Leach said: "Notwithstanding HealthSouth's desire to create maximum distance between its founder and the management, the entire history of American civil justice dictates that this company recognise its contractual obligations, pay what it owes and move on with its business."

Mr Scrushy's fate has been dramatically different from that of other company executives who have been put on trial for fraud. Bernie Ebbers, the former chief executive of WorldCom, has been jailed for 25 years, while Dennis Kozlowski, the former Tyco chief, was sentenced to eight to 25 years.

In a move which seemed to undermine the prosecution in the HealthSouth case, Mr Scrushy's defence team emphasised the fact that of 10 former executives who co-operated with the case and were sentenced before the trial began, only one was given even a brief jail term. However, William Owens, a former finance director at HealthSouth who wore a hidden microphone during conversations with Mr Scrushy, was jailed for five years this week.

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