HealthSouth Suffers a Relapse

Following Hillman's appointment last fall, the Associated Press reported that the new HealthSouth director had served as CEO of Bally Total Fitness (BFT) at a time when Scrushy and some of his colleagues pursued -- but never completed -- a buyout of the company. Hillman also served as an audit partner for Ernst & Young, which was fired last year by HealthSouth after failing to uncover the company's massive accounting fraud.

Hillman has since gone on to fill another board seat, accepting a directorship at Lawson Products (LAWS) this month, despite a pledge from HealthSouth's board to limit its outside activities. But the company has kept other commitments. Just last week, in fact, it announced that it had hired a chief compliance officer to strengthen its corporate governance program.

John Markus, the veteran health care attorney tapped for the new post, previously filled a similar position at Fresenius Medical Care. And his experience at the big dialysis chain could prove valuable. While there, Markus inked a record-breaking $486 million deal with the government to settle a host of Medicare fraud charges levied against the company before his arrival on the scene.

Robert May, who currently serves as HealthSouth's interim CEO, recently introduced Markus as an important addition to a new senior management team that will strengthen the company going forward.

"We are committed to ensuring that HealthSouth has the best practices in place in all areas of corporate governance and compliance," May said last week. "Today's announcement reflects HealthSouth's continuous effort to bolster and enhance our ability to serve our stakeholders."

HealthSouth has promised to create a board dominated by independent directors. It has also pledged to implement strict policies for related-party transactions, which have been blamed for stirring up serious conflicts in the past.

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