HealthSouth

Tuesday said five long-standing board members were stepping down in the wake of the accounting fraud scandal at the company.

The decision was expected and is part of a legal settlement with the Teachers Retirement System of Louisiana, in which HealthSouth also agreed to hold board meetings no later than 60 days after the company's audited financial statements are available.

The company's former Chairman and CEO Richard Scrushy was indicted in November for conducting massive fraud at the company from the mid-1990s until this year. Scrushy is the first chief executive officer of a large company to be charged under the Sarbanes-Oxley Act, which holds CEOs and CFOs criminally responsible for signing false

Securities and Exchange Commission

filings. Scrushy says he's innocent of the charges.

Fifteen former HealthSouth officials have already acknowledged that they helped overstate the firm's financial results by more than $2.5 billion.

Critics say Scrushy dominated the board, making it easier to commit the alleged accounting fraud.

According to a company news release, two directors will leave by Dec. 15, 2003, two others by April 15, 2004 and the fifth by Aug. 31, 2004. The company said all are leaving voluntarily and will be replaced by four new directors. The three directors who joined the board after August 2002 will stay on and work with the new management team.