Scrushy v. Tucker

Richard Scrushy (defendant) was a former chief executive officer of HealthSouth Corporation. Part of Scrushy’s total compensation package consisted of bonuses based on HealthSouth’s profits. At some point, the government initiated criminal charges against Scrushy relating to allegedly fraudulent accounting practices. Wade Tucker (plaintiff) filed a shareholder derivative suit on HealthSouth’s behalf against Scrushy. The complaint asserted numerous claims based on Scrushy’s and other directors’ accounting fraud. Scrushy was alleged to have manipulated and falsified HealthSouth’s earnings by at least $1.4 billion. The complaint also included a claim for unjust enrichment premised on Scrushy having received bonuses for the years 1997 through 2002 driven by HealthSouth’s reported earnings, which were allegedly inflated and misstated. Scrushy was ultimately acquitted of his criminal charges. Thereafter, Tucker moved for partial summary judgment in the civil suit on the claim for unjust enrichment, seeking only restitution in the amount of Scrushy’s bonuses. The trial court granted the motion, finding that for the years 1997 through 2002, HealthSouth actually incurred losses, not profits, and that “no bonus pool existed out of which the bonuses for these years could properly have been paid to Scrushy.” Judgment against Scrushy was entered in the amount of $47,828,106, representing gross bonuses paid to him plus interest. Scrushy appealed. On appeal, Scrushy did not dispute that HealthSouth’s earnings were inaccurate and unreliable but argued that the trial court did not sufficiently balance the equities or consider that Scrushy had already paid taxes on his bonus income.