Lawsuit over HealthSouth fraud cleared to move forward

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March 23, 2018

The Alabama Supreme Court says one-time employees of the old HealthSouth Corp. can move ahead with a lawsuit over the fraud that nearly wrecked the Birmingham-based company.

The justices overturned a lower court decision blocking the lawsuit in a decision Friday.

HealthSouth survived a massive fraud scandal in the early 2000s that resulted in the ouster of founder Richard Scrushy. The company now calls itself Encompass Health.

One-time employee shareholders filed suit in 2003 over the fraud, but the case was delayed 11 years. The court now says the latest version of the lawsuit is related to the original complaint and can go forward.

Encompass Health operates 127 hospitals and 237 home health and hospice locations in 36 states and Puerto Rico.

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