10
[Management 3200 – Business & Society
08
Fall
I. Background Information a.) HealthSouth Corp. is the nation’s largest provider of rehabilitation, outpatient surgery and diagnostic services. Now however, it is the nation’s largest inpatient rehabilitation hospital. * At the company's height in 2003, it recorded nearly $4.5 billion in revenue, dominated the rehabilitation, surgery and diagnostic services market and employed more than 60,000 people at 2,000 facilities in every state of the U.S. * HealthSouth’s hospitals provide a higher level of rehabilitative care to patients who are recovering from conditions such as stroke and other neurological disorders, orthopedic, cardiac and pulmonary conditions, …show more content…
Scrushy, was accused of directing company employees to falsely report grossly exaggerated company earnings in order to meet stockholder expectations. c.) In 2002 through 2003, Scrushy was accused of poor over-sight and leading an extravagant CEO life-style instead of running the day-to-day management of the company. * The company was also accused of rigging Medicare and Medicaid billing histories and investors were pushing for a change in overall management. * Scrushy was also nailed for not returning a $25 million loan he had received as an executive stock-purchase plan on time, and eventually paid it in stocks instead of cash like it was planned. * A lot of the scandal had to do with Scrushy’s need for self-affirmation and lead the company as if he was the king of an …show more content…
He was at a pre-conventional phase and was not ethically aware of his wrongdoings. He was not at all a moral person and a self-centered manager that valued his interests and not the stakeholders. b.) The SEC alleged that HealthSouth was able to increase its earnings while balancing its books by overstating assets and understating liabilities. This was done in a variety of ways, but certain accounts in particular were utilized most frequently in connection with the fraudulent reporting. A clear example of a faulty organizational structure and hypocritical leadership. * On the balance sheet side of the entries, the forensic audit report noted that slightly more than $1 billion of the fraudulent entries was related to nonexistent fixed assets, and also fabricated more than $400 million in income and assets through fraudulent acquisition