Healthsouth Fraud Case Study

HealthSouth Fraud Richard Scrushy was the founder of HealthSouth he graduated from Jefferson State Community College and become a registered respiratory therapist after studying at Alabama Birmingham University. He later went to St. Louis and became the regional director of the respiratory therapy department at Lifemark. He eventually moved to Houston and became the COO. In 1984 He left to follow his dream of creating a rehabilitation center in Little Rock. The company changed their name from Amcare to HealthSouth. After three years the company expanded and introduced workers compensation and sports medicine. After the expansion the company had doubled the revenues and had $100 million in assets. 17 years later the company had more the $4 million in revenue and had helped 100,000 patients per day around the world. There were a total of about 60,000 The scandal started about March of 2003 when the Securities and Exchange Commission filed a civil fraud charges against HealthSouth for lying about the companies earning targets. About a week later William Owens the Chief Financial Officer of HealthSouth pleads guilty to doctoring financial statements. On March 31st HealthSouth fired Scrushy and the auditors as the third financial officer were proven guilty. Late April is when the house
The investigators found a letter from 1998 which was 4 ½ years earlier stating that there was something was happening at HealthSouth. The first part of July of 2003 HealthSouth announced that they will be avoiding bankruptcy by hiring experts to help with underperforming assets and conserving cash. A few days later there was a document released saying that UBS analyst Howard G. Capek called HealthSouth a “pig” that couldn’t “collect and convert sales into cash” in an email, just weeks after Capek was working with an investment banker to promote a deal to sell a portion of the