HealthSouth Breaks Ranks With Scrushy

HealthSouth(HLSH Quote) ousted Chief Executive Richard Scrushy, the man accused by the Securities and Exchange Commission of masterminding a plot in which the company overstated earnings by more than $1 billion.

The disgraced surgical rehabilitation provider said it had also decided to replace its auditors, Ernst & Young.

HealthSouth noted that Scrushy's rights to severance payments and benefits were also terminated, and that it sought his resignation from its board. It also let him know that if the company is forced to revise its financial statements, he'd have to give up any bonuses, incentive-based equity and the profits from any HealthSouth stock sales received during the 12 months after the filing of the revised statements.

Two former HealthSouth chief financial officers pleaded guilty to fraud charges and said they'd cooperate in the investigation into Scrushy. HealthSouth was delisted by the New York Stock Exchange last week and is trading for pennies on the pink sheets now.