BIRMINGHAM, AL—HealthSouth Corporation, under investigation in one of the biggest fraud cases to break this year, has turned to Euro RSCG Life NRP—the former Noonan Russo—for public relations and investor relations counsel.
Agency principal Susan Noonan is spearheading the company’s communications with the investment community, while senior vice president and New York general manager Ernie Knewitz is handling media relations. Both are working full-time from HealthSouth headquarters in Alabama.
Says Noonan, “We have taken over as the company’s external spokespeople. They have a team that is very experienced in dealing with local media, and handling physician and patient communications, but they have never experienced anything like this before. We have done a lot a crisis work in the healthcare services area, including scandals and bankruptcies.”
Having said that, she added that the HealthSouth project presented some new challenges. “This is the first time we felt we had to move on site with the client. This is a multifaceted story with lots of different participants.” She says the firm is working with both the interim chief executive, Bob May, and the board of directors.
Former CEO Richard Scrushy has now been implicated in the fraud charges by two senior executives at the company, most recently by chief financial officer William Owens, who yesterday entered a guilty plea to fraud charges. Prosecutors say that in order to meet Wall Street expectations, the company falsified what is known as the contractual adjustment—revenue items that estimate the difference between gross charges to patients and the amounts health insurers actually pay.
In addition to Euro RSCG Life NPR, the company has hired a team of special advisors, including a forensic auditing team from PriceWaterhouseCoopers, turnaround advisory specialist Alvarez & Marsal, and the law firm of Skadden Arps Slate Meagher & Flom.
“HealthSouth is committed to fully investigating and resolving all issues relating to its financial reporting, and will take appropriate actions against any employee found to have committed any fraud or other wrongdoing,” said Joel Gordon, acting chairman of the board.