Encompass Health Corp (EHC)

[Joe Stocks]

Report: Feds expand HealthSouth probe
By CBS MarketWatch
Last Update: 1:24 AM ET Jan. 29, 2004


SAN FRANCISCO (CBS.MW) -- The Justice Department is expanding its probe of HealthSouth to investigate possible violations of federal antibribery laws in connection with its business in the Saudi Arabian health-care market, according to a published report.

in the online edition of the Wall Street Journal on Thursday, citing people familiar with the probe, said investigators are trying to determine whether HealthSouth (HLSH: news, chart, profile) provided kickbacks in a project to develop a hospital near Riyadh, Saudi Arabia, in 2000.

The Journal report said the inquiry is part of the federal government's investigation into a $4 billion accounting fraud at the Alabama-based operator of rehabilitation facilities.

Last week, former HealthSouth chief executive Richard Scrushy reached a deal with U.S. prosecutors to get access to some of his assets, which were frozen last year. Scrushy and more than a dozen other former HealthSouth executives all have been charged in federal court in connection with their alleged roles in the accounting fraud.

Representatives from HealthSouth could not be reached early Wednesday to comment on the Journal story. The Journal reported Scrushy's attorney, Thomas Sjoblom, said his client had nothing to do with the Saudi Arabia contract.

Shares of HealthSouth fell 4 cents on Wednesday to close at $5.25.