Lawmaker Seeks Author of Memo

The chairman of a U.S. congressional panel investigating HealthSouth Corp. appealed publicly Thursday for an anonymous whistle-blower in the company’s unfolding scandal to step forward.

A House committee has unearthed a 1998 memo, signed only “Fleeced Shareholder,” that outlines many of the accounting shenanigans that have landed the Alabama-based health-care services provider in hot water five years later.

“We don’t know who sent the memo and one of the reasons we released the memo was because we’d like that individual to step forward,” said Rep. James C. Greenwood (R-Pa.), head of the investigative subcommittee of the House Energy and Commerce Committee.

“We’re sure that whoever wrote this memo five years ago knew then and knows now a lot more than was in this brief memo. So we would love for that individual to identify himself to the committee -- call my office,” Greenwood said in an interview on CNBC.

He said the committee hopes to hold a public hearing on its HealthSouth probe findings in late July.

HealthSouth, an operator of physical therapy and surgical clinics, has been accused of inflating earnings reports by $2.5 billion over several years.

Eleven former officers, including all five of its ex-chief financial officers, have pleaded guilty to criminal charges and agreed to cooperate with Justice Department and Securities and Exchange Commission investigations.

The House committee released the one-page memo Wednesday and said it showed that warnings “were given to HealthSouth’s corporate watchdogs.... Yet, no one appears to have listened.”

The memo was obtained by committee investigators from accounting firm Ernst & Young, which told investigators that it brought the memo to the attention of HealthSouth management in 1998.

Committee staff members said Ernst & Young told them the audit firm was assured at the time by HealthSouth managers that the health-care company would mount an inquiry into the matter.

Greenwood said committee investigators have combed through HealthSouth records and “found no indication that the audit committee raised this issue at board meetings, no indication that the employees did any kind of an internal investigation.”