HealthSouth was the U.S. healthcare company accused in 2003 of overstating earnings by about $2.7 billion.
The scandal centered on accounting entries that falsely increased the company’s reported profits. Federal investigators said senior executives created fictitious transactions and manipulated figures to meet Wall Street expectations. HealthSouth’s founder and chief executive, Richard Scrushy, was charged in connection with the fraud.
The case became public after chief financial officer Weston Smith secretly recorded conversations with investigators. Several executives pleaded guilty, and the company restated its financial results. Scrushy was acquitted of the main accounting-fraud charges in 2005, although he was later convicted of bribery connected with former Alabama governor Don Siegelman.
HealthSouth is sometimes confused with later healthcare fraud cases involving billing patients or insurers. This scandal was primarily a corporate accounting fraud involving inflated earnings and assets.