Court rules against HealthSouth in auditor dispute


MONTGOMERY, Ala. (AP) – The Alabama Supreme Court is ruling against Birmingham-based HealthSouth Corp. in a legal dispute linked to the accounting fraud that rocked the rehabilitation company.

The justices on Friday rejected an appeal filed by HealthSouth in a legal fight involving its one-time auditing company Ernst & Young.

HealthSouth filed a complaint blaming Ernst & Young for failing to detect the $2.6 billion accounting scam that occurred under former CEO Richard Scrushy.

An arbitration panel ruled against HealthSouth and the company appealed to Jefferson County Circuit Court. That court sided with the auditor, and HealthSouth appealed again.

The Supreme Court decision upholds the ruling against HealthSouth.

The justices say there’s no evidence the arbitration decision against HealthSouth was fundamentally unfair or that the panel engaged in any misconduct.

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