Web Health South Corporation example essay topic

Running head: HEALTHSOUTH: THE RISE AND FALL HealthSouth: The Rise And FallAbstractRichard Scrushy (Scrushy) had a vision and was driven by his leadership and entrepreneurial abilities. Scrushy was the mastermind and major creator of Health South Corporation (Health South). Scrushy served as chairman and Chief Executive Officer (CEO) of the corporation for more than 20 years. A Biographical Sketch: Richard Scrushy and Health South. Retrieved March 22, 2005, from the World Wide Web: web The U.S. Securities and Exchange Commission charged Health South Corporation and CEO Richard Scrushy with fraud, alleging the earnings of Health South have been extremely overstated since approximately 1999. Bassing, T. (2003, March 19).

SEC charges Scrushy; 41.4 B civil fraud alleged. Birmingham Business Journal. Retrieved March 23, 2005, from World Wide Web: web Scrushy has been replaced Jay Grinney (Grinney) who recently accepted the position of President and CEO of Health South. Grinney has a vision for Health South and is confident he will succeed in restoring the corporation to its original status of leadership in the world of healthcare. Health South: The Rise and Fall Richard Scrushy (Scrushy) was born in Selma, Alabama in 1952. He had two siblings which consisted of an older sister and a younger brother.

Scrushy was raised by two working parents and the family attended a local Methodist Church located in Selma. As a young boy, Richard was always able to find a job making money. His entrepreneur endeavor's emerged during his teenage years and continued there after. Retrieved March 22, 2005, from the World Wide Web: web Scrushy chose to continue his education beyond high school and was graduated from college, but not before marrying his first wife and becoming the father of two children. During his years in higher education, he became interested in respiratory therapy and enrolled in the respiratory therapy program at the University of Alabama at Birmingham (UAB).

Scrushy was intellectually gifted, had excellent leadership abilities and quickly began climbing the corporate ladder of success which required leaving UAB and moving to Wallace State Community College in Dothan, Alabama. One year later, Scrushy accepted a position with Life mark and began a flourishing rise in the corporate world. Scrushy had dreams of his own and during his successful ascend, began planning a new company. He visualized a rehabilitation corporation with outpatient centers, clinics and hospitals.

These centers, which were only a dream, would swiftly move patients through physical rehabilitation and permit them to return to work, jobs, and home at a much quicker pace than individuals were accustomed. Scrushy's vision became a reality and would emerge in the world of health care as Health South. Retrieved March 22, 2005, from the World Wide Web: web Health South began operation in 1984 with five employees who shared a one room office. Scrushy supplied the majority of the money, paid payroll and business expenses out of his own pocket until spring of 1984. Twelve years after its founding, Health South was named to the Fortune 500. Health South had quickly become a major leader in rehabilitation, surgery, and diagnostics with operations in all fifty states.

Centers were strategically placed in numerous countries outside the United States. The centers operated by Health South and under the leadership of Scrushy were regarded highly for the outstanding service, commitment, and state-of-the-art technology. Retrieved March 22, 2005, from the World Wide Web: web Health South Corporation advanced as a thriving business and Scrushy was making millions of dollars. In 1996 Scrushy's pay consisted of the following: $3.4 million in salary, $8 million in bonus and $16.2 million in stock sales for a total of $112.3 million. By 2002, Scrushy's pay reached $112.3 million and consisted of: $3 million in salary, $10 million in bonus and $99.3 million in stock sales. Retrieved March 22, 2005 from the World Wide Web: web Health South has more than 50,000 employees nationwide and has facilities in all 50 states, Puerto Rico, United Kingdom and Australia.

Retrieved April 5, 2005 from the World Wide Web: web At the height of Scrushy's career, he owned $278.7 million worth of homes, cars, boats, airplanes, art, jewelry and other possessions. Retrieved April 5, 2005 from the World Wide Web: web In addition to the numerous monetary items Scrushy accumulated, he has been married three times and has nine children. Retrieved April 5, 2005 from the World Wide Web: web x. htm. Scrushy surrounded himself with an empire that consisted of possessions most people can only dream of, but never have the opportunity to own or experience. Life as Scrushy had become accustomed was about to change as his empire began to crumble as lies, deceit, and money laundering through Medicare fraud surfaced. On March 19, 2003, The Securities and Exchange Commission (SEC) filed accounting fraud charges in federal court against Health South Corporation and Richard Scrushy.

The Commission alleged Scrushy falsely overstated earning of Health South by at least $1.4 billion in order to meet or exceed Wall Street earnings expectations. Retrieved March 22, 2005 from the World Wide Web: web The investigations of Health South, Scrushy, and his entourage were conducted by the FBI-Birmingham Field Office, the Internal Revenue Service-Birmingham Division, and the United Stated Postal Service. A total of 19 individuals, including Scrushy, were charged with crimes during the on-going investigation with the government securing 17 guilty pleas among the individuals. Retrieved March 22, 2005 from the World Wide Web: U.S. Department of Justice, September 29, 2004, web During the month of November 2003, a federal grant jury returned an 85-count indictment against Scrushy to which he pleaded not guilty. An additional indictment in September 2004 sought the forfeiture of more than $278 million in property (homes, boats, vehicles, and aircraft) which Scrushy had obtained during his rise to success. Retrieved March 22, 2005 from the World Wide Web: U.S. Department of Justice, September 29, 2004, web Scrushy was the founder and executive leader of a corporation which started small and climbed its way to success in health care.

Scrushy is currently on trial and has been labeled as the mastermind of an accounting fraud of Health South and shareholders. Scrushy became the first corporate executive to be tried under the provisions of a corruption law known as Sarbanes-Oxley. Retrieved March 22, 2005 from the World Wide Web: Institute For Global Ethics, November 10, 2003, http: // / global ethics. org / news line / members /issue. tm pl? article id = 11100316510695. Congress passed the Sarbanes-Oxley Act (the "Act"), in 2002. The act is named after Senator Paul Sarbanes and Representative Michael Oxley and is considered to be one of the single most important pieces of legislation affecting corporate governance, financial disclosure and the practice of public accounting since the US securities laws of the early 1930's. Retrieved April 6, 2005 from the World Wide Web: A Guide To The Sarbanes-Oxley Act, 2002. web The actual "Sarbanes-Oxley Act" of 2002 was signed by President George W. Bush on July 30, 2002 and applies to U.S. and non-U.S. public companies which have registered securities under the Securities Exchange Act of 1934.

Lander, G.P. (2004). What is Sarbanes-Oxley? , Chicago: The McGraw-Hill Companies, Inc. The Act includes provisions which require senior management, principal executive officers, and principal financial officers of companies to certify reports filed with the SEC. The Act does not allow any certification to be signed under a power of attorney on behalf of an individual. Lander, G.P. (2004).

Tight controls regarding financial certification have been implemented, and consist of material weaknesses, significant deficiencies, fraud, and material changes. Any officer who provides false certification is subject to SEC violations. In addition, the Act directs the SEC to adopt regulations that require the stock exchanges and Nasdaq to disallow the listing of securities of any company which does not have an audit committee that meets the necessary requirements as set forth under the guidelines. The newly adopted Act addresses attorneys and their responsibilities when representing companies.

Lander, G.P. (2004). The Act addresses criminal misconduct in two areas: - CEO and CFO officer certification requirement- Destruction of corporate audit records and / or alteration or falsification or records If convicted of the above mentioned crimes, an individual may be imprisoned from 10 to 25 years and face fines ranging from $5,000 to $5 million. Corporations may face fines higher than those imposed on an individual. Retaliation against informants is strictly prohibited and the statute of limitations for securities fraud has been extended to five years after the actual date of violation. An individual guilty of violating the general anti fraud provision of the Act may be barred from ever serving as a director or officer of a public company if their conduct demonstrates "unfitness" to serve as such. Lander, G.P. (2004).

In March 2003, Scrushy took administrative leave and states he is currently working to clear his good name of the false accusations made against him. Retrieved March 22, 2005, from the World Wide Web: web The Scrushy's are currently hosting a daily evangelical television show. Scrushy is viewed by some individuals as a man of integrity and his third wife continues to stand by him while he proclaims his innocence. Romero, S. February 17, 2005, Will the Real Richard Scrushy Please Step Forward, The New York Times. Prior to the investigation, Health South facilities proudly displayed a large picture of Scrushy for public display.

Currently, the same facilities have removed pictures of the man that was once their fearless leader and when his name is mentioned, a man of integrity is not part of the conversation. Jay Grinney (Grinney) was elected on May 3, 2004 to the position of President and Chief Executive Officer. Grinney's title was effective May 10, 2004 and has outlined five critical categories as Health South moves into the future: Quality and Compliance, Growth, People, Service, and Financial. Rehab Resource (March 1, 2005). Administrator's Corner, Volume 5, Issue 3. Grinney has articulate goals and is focused on the challenge's which loom before him.

Grinney has stated to administrators of Health South facilities, "We are going to be fine" and is quoted as saying, 'I have dedicated my career to healthcare and Health South is in a "sweet spot" in the healthcare continuum. ' Grinney views Health South as a challenge while remaining optimistic about its future. Grinney, J. (2005). A tough job, but I love it. Modern Healthcare, 22.

Bibliography

Grinney, J. (2005).
Modern Healthcare, 22 Lander, G.P. (2004).
Retrieved March 23, 2005, from World Wide Web: web S.
February 17, 2005, Will the Real Richard Scrushy Please Step Forward, The New York Times Biographical Sketch: Richard Scrushy and Health South.
Retrieved March 22, 2005, from the World Wide Web: web Rehab Resource (March 1, 2005).
Administrator's Corner, Volume 5, Issue 3 Retrieved March 22, 2005 from the World Wide Web: Institute For Global Ethics, November 10, 2003, http: // / global ethics.
org / news line / members /issue. tm pl? article id = 11100316510695 Retrieved March 22, 2005 from the World Wide Web: U.
S. Department of Justice, September 29, 2004, web March 22, 2005 from the World Wide Web: web April 5, 2005 from the World Wide Web: web Retrieved April 5, 2005 from the World Wide Web: web Retrieved April 5, 2005 from the World Wide Web: web x.
htm Retrieved April 6, 2005 from the World Wide Web: A Guide To The Sarbanes-Oxley Act, 2002.