Former TSU trustee, HealthSouth CEO faces lawsuits
Former Troy State University trustee Richard Scrushy is facing some legal troubles.
The namesake of the Troy State football field received a rebuke from a Delaware court last week when a judge ruled that a committee from Scrushy's company, HealthSouth, was not independent and denied its request to delay a lawsuit against the company.
The lawsuit against Healthsouth alleges that the company's officers dumped stock shares while knowing in advance that Medicare cuts would erode earnings. Shares for the chain of rehabilitation hospitals have plummeted 76 percent since Aug. 27.
The Securities and Exchange Commission has been investigating charges that Scrushy sold more than 2.5 million shares back to the company in July, a month before the company disclosed the revelation that the Medicare change would slash earnings by $175 million.
Leo Strine, vice chancellor of the Delaware Chancery Court, ruled that a committee headed by Healthsouth board member Robert May was biased in favor of Healthsouth and couldn't be trusted to be impartial. Strine denied the committee's request to delay the trial.
According to Strine's opinion, "The committee's strange conduct and troubling composition are too confidence-undermining to meet the independence requirement."
Healthsouth is also facing suits seeking compensation for shareholders in Jefferson County Circuit Court and in U.S. District Court in Birmingham. The company, founded in 1984, reported more than $4.3 billion in revenue in 2001.
Scrushy, a graduate of Jefferson State Community College and UAB, was appointed by then-Gov. Fob James to the TSU Board of Trustees in 1997. He donated $1 million to complete renovations to Memorial Stadium and holds honorary doctorates from Troy State, Birmingham-Southern College and the University of Alabama.
Stephen Stetson can be reached at stephen.stetson @troymessenger.com.