Essays Healthsouth Scandal

02. Aaron Beam And The Health South Fraud


Ethics and Organizations

Case Study 1

Vernon Tilly Jr.

University of Central Oklahoma


In reference to the Aaron Beam and the HealthSouth Fraud case in our text Velasquez

(2012), the following questions from the text and my answers to these questions are provided as


1. Which of the "obstacles to moral behavior do you see at work in Aaron Beam's behavior and thinking? In Scrushy's?

The obstacles I see in Aaron Beam's behavior are "Rationalizing Our Actions and

Displacement of Responsibility". Rationalizing his actions is supported by comments he made

in reference to the actions he had or was about to take in supporting his employer. Aaron Beam

stated in Velasquez (2012), "He described the move to himself as aggressive accounting but

definitely not fraudulent" (p 68). In the continual cooking of the books, each time Beam was

press or directed by Scrushy to do so. Aaron Beam possibly considers that to be his get out of

jail free card, by pointing the finger back at his employer, as displacement of his responsibility.

We see clearly what he was thinking in Velasquez (2012), as he "felt it was technically

within the bounds of accounting rules and investors would be sophisticated enough to understand

what was happening" (page 68). This would relate to "Biased Theories about Others", as he

believed this group of investors was sophisticated. You cannot help but think he also felt

secretly an investor(s) would question their actions and bring them to account for their actions

considering the situation he was in with his employer.

The obstacles I see in Richard Scrushy's behavior are "Disregarding or Distorting Harm,

Euphemistic Labeling, and Rationalizing Our Actions". In reference to "Disregarding or

Distorting Harm" based on the belief he was doing a good thing by providing rehabilitation

therapy to patients at lower costs than regular hospitals, one could surmise he found doing


whatever it takes to succeed he would do, all on the backs of his employees, of which as CEO he

could discredit at will. We could also, along these lines consider "Euphemistic Labeling" as he

was not above lying as interpreted by the various financial reports produced to make the

company look more profitable under the veil of only business. He himself would feel pressure in

1996 as they could not meet second quarter projections. He would once again ask Aaron Beam

to cook the books, or the company would face financial ruin. Scrushy rationalizes this away by


Loading: Checking Spelling


Read more

Organizational Financial Analysis Examine programs that provide solutions to today’s health care problems. Evaluate the impact of the choice on global health care options and the impact of fraud on...

2419 words - 10 pages Organizational Financial Analysis PAGE \* MERGEFORMAT 1 Organizational Financial AnalysisUniversity of PhoenixOrganizational Financial AnalysisIntroductionFinancial analysis is a necessary means of interpreting data to determine if an organization is profitable or not. Today, most managers are required to be responsible for the finances and accounting for their entire department with an...

How Shakespeare was a fraud and how Edward de Vere was the true author of the Shakespearian works.

691 words - 3 pages Frauds are common all throughout history. One of the most infamous, but least commonly known, fakes of all time was William Shakespeare. Shakespeare did not author any of the plays for which he is credited.The plays that Shakespeare apparently wrote had in-depth details of how the court system worked. Therefore, "There is no mention in the documents of the...

Richard Scrushy and HealthSouth

2293 words - 9 pages Introduction HealthSouth is one of the nation’s largest healthcare providers specializing in rehabilitation. HealthSouth was founded by Richard M. Scrushy in 1984 and went public in 1986. Scrushy served as its Chairman of the Board from 1994 to 2002. The company was incorporated in January 1984 as Amcare Inc. before its name was changed to HealthSouth Rehabilitation Corporation in May 1985. In January of 2003, Mr. Scrushy...

Corporate Compliance Benchmarking MBA 560

4997 words - 20 pages In the context of corporate governance, compliance means obeying the law (Deloitte & Touche, 2003). Because of the most recent corporate scandals such as Enron and WORLDCOM legislation has cracked down on corporate accountability for compliance. Some of the most recent major changes to corporate compliance include the Sarbanes-Oxley Act of...

Organizational Behavior Trends Paper

534 words - 2 pages This paper will evaluate trends in organizational behavior as it relates to the influence of ethics on decision making and the impact of technology on work-related stress.How does the influence of ethics affect decision making in organizations? What does it mean to be ethical? Questions as such has been increasingly important since the scandals in the 1990's and early 2000's because of companies like Enron,

How The Sarbanes-Oxley Act Will Impact The Audit Function

2007 words - 8 pages Before the Enron-Arthur Anderson scandal, auditors were generally viewed as independent and trustworthy professionals. They protected the interests of the individual investor by ensuring that corporations presented financial statements that accurately reflected the financial results of operations. The auditor was trusted to present the facts as he saw it, regardless of the implications. When events such as the academy awards used the services of...

"How have different Public Sector organisations developed their strategic approaches to countering fraud"?

2306 words - 9 pages What is a strategy? What is meant by strategy and do all parties have the same concept of what is meant"Strategy is a process, a constant adaptation to shifting conditions and circumstances in a world where chance, uncertainty and ambiguity dominate..." (Murray, Grimsley 1994 Pg1))Criminal Justice (ICJS 2002 Pg81)) states that strategy is about...

The Accounting Career and Its Contributions to Society

1157 words - 5 pages Since the day we are able to comprehend, our parents have tried to set a good example for us to understand the importance of right and wrong and how to act in many situations. As we get older to attend school, our teachers, family, and friends also influence our daily lives. During our journey to adulthood, we come across everyday challenges of whether to be ethical or unethical in situations we find ourselves in. When entering our career...

Tyco Fraud

3507 words - 14 pages TYCO Contents3About TYCO 5The Fraud 6The Rise of TYCO 7The Fall of Tyco 2002 8Executive' lavish lives 10Discovery of the fraud 11Tyco investigation Timeline 12Charges laid: 13A different kind of corruption case 14Ethical and Legal issues at Tyco 15Theory Applicable:...

"Electron Microscopes" - Electron Microscopes (EMs) are scientific instruments that use a ray of electrons to examine small matter on a very fine scale.

688 words - 3 pages Electron MicroscopesElectron Microscopes (EMs) are scientific instruments that use a ray of electrons to examine small matter on a very fine scale. They are extremely useful, as they can produce the following information;*Topography; this is how the surface appears, for example the texture.*Morphology; this is the shape and size of the particles that make up the matter.*Composition; this is the elements and the...

Corporate Compliance Benchmarking

3955 words - 16 pages University of PhoenixApril 06, 2009Benchmarking Article: Does Corporate Governance Matter?Benchmarking is a great way to contrast and compare well know companies. The two companies selected for this benchmark is two Japanese based companies (Toyota and Cannon) and two US companies (General Motors and Xerox). The purpose of the assignment is to determine what role corporate governance plays in the success of each company.Based on...

The Accounting Scandal of Healthsouth - Essay

906 words4 pages

Show More

The Accounting Scandal of HealthSouth

HealthSouth Corporation is based in Birmingham, Alabama, it is the largest provider of rehabilitative health care services. It operates in 26 states in the United States of America and in Puerto Rico. HealthSouth provides rehabilitation hospitals, long term heightened care hospitals, outpatient rehabilitation satellite clinics and home health agencies.
HealthSouth was found by Richard Scrushy in the year 1984 and was called Amcare, Inc. It opened its first facility in Arkansas and later on that year another one in Birmingham. In 1985 the company changed its name into HealthSouth Rehabilitation Corporation, in 1990 the company expanded to 50 facilities around the US.…show more content…

At the trial some of the former executives of HealthSouth testified against Scrushy claiming he ordered the accounting manipulation, but these officials were pleaded guilty so they agreed to testify against Scrushy to lower their sentence; therefore prosecutors could not come up with evidence to tie Scrushy with the fraud. Judge Karen then dismissed 49 charges out of the 85 against Scrushy, Scrushy however faced further court action, and in 2006 he was convicted of conspiracy, mail fraud and bribery. He was sentenced in 2007 eighty two months of prison and 3 years of probation and ordered to $150,000 of fines and costs of his confinement.
Ever since the accounting scandal was revealed and found, HealthSouth have taken many steps to turn the company around to the better and into becoming a stronger company. It got a new senior management team and the directors working in the company when the fraud occurred have been fired. HealthSouth was able to avoid bankruptcy by selling assets and by renewing contracts. Hundreds of experts were brought to help in reconstructing the company’s record, improve the accounting policies and more.
HealthSouth even got approved by the NYSE in October of the year 2006, as part of corporate restricting plan; the company also sold its diagnostics division, surgery division and outpatients divisions on 2007. With this new structure for HealthSouth firmly in

0 Replies to “Essays Healthsouth Scandal”

Lascia un Commento

L'indirizzo email non verrà pubblicato. I campi obbligatori sono contrassegnati *