In a brief order, U.S. District Judge Inge Johnson wrote that mediation was appropriate in the Securities and Exchange Commission's suit against Scrushy since separate federal lawsuits filed by investors previously were referred for negotiations before a mediator.

Scrushy spokesman Charlie Russell on Friday called the judge's order a "positive development," but SEC attorney John D. Worland Jr. said details of the talks had yet to be worked out.

"I don't know exactly what the judge has in mind here," he said.

Scrushy was found not guilty in June on criminal charges of directing a $2.7 billion fraud at the Birmingham-based rehabilitation and medical services chain.

The defense agreed with prosecutors that a huge earnings overstatement occurred, but jurors sided with claims that Scrushy played no role in the crime. Scrushy was fired after the fraud was revealed in 2003 but remains a HealthSouth director in name only.

After the acquittal, Johnson cleared the way for the SEC to move forward with a lawsuit it filed seeking some $785 million from Scrushy for his alleged leadership of the fraud.

HealthSouth, which Scrushy founded in 1984, previously agreed to pay $100 million to settle its portion of the SEC civil suit.

A former federal judge who has followed the litigation against Scrushy said Johnson's decision to order mediation, released Thursday, made sense since other suits related to the HealthSouth fraud already were in settlement talks.

"It's just an attempt to get the case resolved rather than going through the expense of a trial," said former U.S. Magistrate Judge John Carroll, currently dean of the law school at Samford University in suburban Birmingham.

Scrushy has asked HealthSouth to reinstate him as a full board member and let him see all the company's books, a request HealthSouth described as shameless since the fraud occurred under his management.

-- Jay Reeves (AP Writer)