HealthSouth's House of Cards Falls

Updated from 8:03 a.m. EST

The roof caved in on HealthSouth(HRC Quote) and Chief Executive Richard Scrushy Wednesday, as the Securities and Exchange Commission charged that the scandal-plagued surgical rehabilitation company has been running a $1.4 billion accounting scam since 1999.

In the release, the SEC alleges that Scrushy directed a massive campaign to overstate HealthSouth's earnings by $1.4 billion in order to meet or beat Wall Street earnings estimates. The overstatements also affected the company's assets, which the SEC claims were inflated by $800 million by the third quarter of last year.

The news caps a year of swirling controversy for the Birmingham, Ala., health care company, dating to last summer when the company slashed hundreds of millions of dollars from its earnings forecasts because of Medicare changes. The SEC subsequently started investigating whether Scrushy bailed out of the stock before the shortfall was publicized. ...