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Ex-HealthSouth Chief Scrushy Wins Reversal on Two Counts

HealthSource Corp. Founder Richard Scrushy
Richard Scrushy, founder of HealthSource Corp. arrives for sentencing at the federal courthouse in Montgomery, Alabama, on June 28, 2007. Photographer: Dana Mixer/Bloomberg

Richard Scrushy, the former chief executive officer of HealthSouth Corp., won reversal of two convictions from his 2006 criminal trial, while the U.S. appeals court affirmed four other counts.

The appellate panel in Atlanta sent the case back to the trial court for resentencing today after reviewing the charges for a second time. The U.S. Supreme Court ordered the re-examination last year after narrowing the scope of a federal law making it a crime to deprive citizens and shareholders of the honest services of public and corporate officers.

The three-judge panel upheld two of the honest-services convictions against Scrushy and former Alabama Governor Don Siegelman, while overturning two other such counts relating to the former CEO’s alleged self-dealing with the ex-governor’s help.

“This was a step in the right direction,” Scrushy’s lawyer, Bruce Rogow, said in a phone interview. The attorney said he will ask the Supreme Court to examine today’s decision too. “We think there can be a giant step if the Supreme Court accepts review.”

The appellate panel upheld Scrushy’s convictions on bribery and conspiracy. Scrushy is serving six years and 10 months in a federal prison in Beaumont, Texas, after a Montgomery, Alabama, jury convicted him in 2006 of giving Siegelman a $500,000 campaign contribution in exchange for a seat on a state hospital regulatory board. He was acquitted in 2005 on criminal charges of directing an accounting fraud.

‘Out Sooner’

“Any kind of reduction of sentence would get him out sooner,” Rogow said.

Laura Sweeney, a spokeswoman for the U.S. Justice Department, said in a phone interview that the department is “pleased” with the court’s decision.

Ruling last year on the appeal of former Enron Corp. Chief Executive Officer Jeffrey Skilling, the Supreme Court said the honest-services law could be applied only in bribery and kickback cases.

The appeals court also sustained Siegelman’s conviction on two honest-services related counts as well as others relating to bribery, conspiracy to commit mail fraud and obstructing justice.

“We’re no better off in terms of a bottom line than we had been before,” Siegelman’s attorney, Sam Heldman, said today in a phone interview.

Heldman said he would seek further review of the ruling, either by a full panel of the appeals court’s judges or at the Supreme Court.

Siegelman, had received a seven-year sentence, which was later vacated. He has been free on bail pending his appeal.

The case is U.S. v. Siegelman, 07-13163-B, U.S. Court of Appeals for the 11th Circuit (Atlanta). The lower-court case is U.S. v. Scrushy, 05-cr-119, U.S. District Court, Middle District of Alabama (Montgomery).

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