Former HealthSouth CEO ordered to repay $48 million in shareholder lawsuit

[JURIST] An Alabama state judge on Tuesday granted summary judgment in a shareholder's lawsuit against Richard Scrushy [defense website; JURIST news archive], former CEO of HealthSouth [corporate website], and ordered Scrushy to return to the company more than $47.8 million in bonuses he received from 1997 to 2002. The lawsuit, filed before HealthSouth fraud charges were made public, alleged that Scrushy was unjustly enriched by accepting performance bonuses while the company was failing to meet the performance standards that triggered the bonuses. Though Scrushy was acquitted by a federal grand jury [JURIST report] last June of responsibility for HealthSouth's fraudulent accounting practices, the judge stated that "knowledge is immaterial to the law of unjust enrichment," and that even if Scrushy was unaware that the company was not actually meeting its financial targets, it would be "unconscionable" for Scrushy to keep the bonuses. Scrushy plans to appeal the ruling to the Alabama Supreme Court for lack of precedent. The ruling cited a previous case against Scrushy where he was ordered to repay HealthSouth $17 million for repaying a loan with inflated stock. The New York Times has more.

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