HealthSouth Accounting Scandal
HealthSouth is the one of the largest providers of inpatient rehabilitative healthcare services in the U.S. HealthSouth is fully operational in 26 states across the United States and also in Puerto Rico. HealthSouth serves patients in various settings such as; inpatient rehabilitation hospitals, long-term acute care hospitals, outpatient rehabilitation satellite clinics and home health agencies. HealthSouth’s hospitals are able to provide an advanced care to patients that are recovering from neurological disorders, orthopedic, cardiac and pulmonary conditions, spinal cord injury, and amputations. HealthSouth’s corporate is office is located at 3660 Grandview Parkway Suite 200, Birmingham, Alabama 35243. The company employs around 26,000 people. The company is listed as an Industry Healthcare Facilities. The symbol used by HealthSouth is HLS. The SIC code is 8060-Hospitals. (http://investor.healthsouth.com/) Richard Scrushy the founder of HealthSouth was at one time described by Steve Barnes of the AP as a self-made son of the new South, a former teenage parent who hauled himself up from a menial job to become the emperor of the new economy. The problem was that the emperor of HealthSouth that he was describing would be later dethroned by an accounting scandal that would involve lies, bribery, and mail fraud, and deceit, prison time for several individuals, obstruction of justice and auctions. Richard Marin Scrushy was born in August 1952 in Selma Alabama. Richard grew up attending the Methodist church. Like any teenager he held several jobs. He attended Jefferson State Community College and became a Respiratory Therapist after studying at University of Alabama in Birmingham. Scrushy transferred to St. Louis, Missouri, then was promoted to the regional director of the respiratory therapy division of Lifemark Corporation. He then moved to Houston, Texas, and advanced in the company to the company’s COO. In 1984, Scrushy realized his dream of creating a comprehensive outpatient rehabilitation facility and founded Amcare in Little Rock, Arkansas. Amcare’s new name was HealthSouth. HealthSouth started trading publicly in 1986. (www.biography.com/articles/Richard-Scrushy-235385) Richard Scrushy and some of his closest friends founded HealthSouth in 1984. The company was formed and had growth in mind from the beginning. The founding members had a plan for growth. By the end of 1987, after expanding into worker’s compensation and sports medicine, HealthSouth has doubled its revenues and had nearly $100 million in assets. By 2001, HealthSouth had more than $4.3 billion in revenue and treated more than 100,000 patients a day around the world. The company had 60,000 employees and more than 2000 locations across the country. To accomplish the task of expansion HealthSouth opted to take over other companies with financial issues. In 2003 the company HealthSouth, the largest U.S. operator of rehabilitation-hospitals, was under investigation by the Securities and Exchange Commission and the U.S. Justice Department for overstating earnings by $2.5 billion since 1999. In 2003, HealthSouth CEO Richard M. Scrushy directed company employees to falsely report grossly exaggerated company earnings in order to meet stock holder expectations. HealthSouth had been dishonest about its income. Richard Scrushy the HealthSouth executive was one of the first executives to be charged under the Sarbanes Oxley Act. In all a total of fifteen HealthSouth employees, including all five of the former chief financial officers, pleaded guilty to criminal charges. However the former CEO Richard Scrushy refused to admit any wrong doing involving HealthSouth. When HealthSouth requested that Scrushy resign he refused to honor the request.(www.washingtonpost.com) On October 16, 2003, Richard Scrushy flat out refused to testify before congress in a hearing. He angered lawmakers that said Scrushy had been at the center of an...
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