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HealthSouth Receives Subpoena Seeking Stock-Related Documents

Feb 6, 2003 | Wall Street Journal

HealthSouth Corp. said it received a subpoena from the U.S. Attorney's office for the Northern District of Alabama, seeking documents for an apparent investigation into trading in the company's stock.

"While the company has not been advised of the nature or scope of the investigation, the types of documents requested suggest that the investigation may focus on transactions by individuals in HealthSouth common stock," the company said in a statement Thursday night.

The company said many of the documents sought have been provided voluntarily by the company to the federal Securities and Exchange Commission, which is investigating the timing of company disclosures last year and of prior stock trades by Richard Scrushy, HealthSouth's chairman and chief executive, and other company insiders.

A review by a law firm hired by HealthSouth found no evidence that Mr. Scrushy's trades were improper.

HealthSouth said it will fully cooperate with the U.S. Attorney's office, "just as it has cooperated with the previous request from the SEC."

Mr. Scrushy Thursday night referred questions to William Horton, the company's corporate counsel. Mr. Horton said he could provide no further details about the inquiry or the subpoena. He said he didn't know if the subpoena could mean that the SEC has turned over its investigation to the U.S. Attorney's office.

Mr. Horton said agents with the Federal Bureau of Investigation have interviewed some HealthSouth employees outside of the company's offices, but he didn't know the nature of the questioning. Neither Mr. Scrushy nor other senior executives have been interviewed, he said.

In a statement, Mr. Scrushy said, "As we have said before, we do not believe that HealthSouth or anyone associated with HealthSouth has done anything wrong."

HealthSouth is a big operator of rehabilitation clinics and outpatient surgery centers. In 4 p.m. composite trading Thursday on the New York Stock Exchange, shares of HealthSouth were off 14 cents at $3.64 each.

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