Ex-HealthSouth CEO Scrushy's Civil Trial Set for 2007

BIRMINGHAM, Ala. – A Birmingham judge set an April 2007 date for the start of the U.S. government's civil trial against former HealthSouth Corp. Chief Executive Richard Scrushy, according to court documents filed late Thursday.

A Birmingham jury in June found the ousted HealthSouth chief not guilty of directing a $2.7 billion accounting fraud at the company he founded, despite testimony from five former chief financial officers at the criminal trial attesting to Scrushy's involvement.

But Scrushy still faces civil charges in a case brought against him by the Securities and Exchange Commission.

U.S. District Court Judge Inge Johnson set an April 2, 2007 start date for Scrushy's next Birmingham trial. She also gave the SEC until Dec. 30 to refile two fraud charge the judge threw out earlier this week because she felt the allegations were too vague.

Earlier this year, HealthSouth reached a $100 million settlement with the SEC in connection with the accounting scandal.

Scrushy, who was fired by HealthSouth after several years of inflated earnings came to light in March of 2003, is facing four charges brought by the SEC in connection with the scandal at HealthSouth, which is based in Birmingham and operates rehabilitation hospitals and surgical centers.

The remaining charges include aiding and abetting HealthSouth's financial reporting violations and liability for HealthSouth's violations by failing to ensure internal accounting controls while chairman and CEO.

Johnson had put the SEC case on hold for more than two years until the criminal case and trial against Scrushy was completed.

It was Judge Johnson who presided over the SEC's failed attempt to have Scrushy's assets frozen prior to the criminal trial.

In handing down that May, 2003 ruling freeing up Scrushy's assets, Johnson was highly critical of the SEC attorneys, saying they had failed to establish "even a reasonable likelihood of success on the merits of the case."

In setting the civil trial schedule, Johnson said she expects it to last four to six weeks.

Scrushy's criminal trial, in which he became the first CEO to face charges of filing false financial reports under the 2002 Sarbanes-Oxley corporate reform law, dragged on for nearly six months.