BAF 3M1/ HealthSouth Scandal

  • Birth of HealthSouth

  • Period: to

    Mission Statement Contradictions

    Integrity
    We consider trust and integrity to be essential in all our relationships. We are committed to operating our business honestly, with financial integrity and in adherence with all federal, state and local regulatory obligations affecting the operation of our business.
    Respect
    ... In addition, we respect our patients, physicians, shareholders, business partners and vendors, recognizing the valuable role each of them plays ... striving to communicate with them openly and honestly.
  • Fraud Started

    Suspected that HealthSouth's fraud scandal commenced this year (the year that the company started working with patients).
  • Fraud Discovered From Within

    "We're under certain pressures to make certain numbers. We have an obligation to stockholders and shareholders," - Scrushy to Maron Webster (HealthSouth auditor).
    At court, Webster announced that he was fired for questioning HealthSouth's accounting.
  • Heavy Earnings = Even More Profits

    Geoffrey E. Harris joins HealthSouth in the midst of the scandal and earns the company billions. Due to these earnings, HealthSouth is allowed more bank loans. Harris had 'predicted' the amount of profits, in which the company's accountants had to produce to match.
  • Birth of MedPartners

    Scrushy, Beam, Larry House and others create MedPartners. HealthSouth does business with MedPartners, thus creating conflict of interest for these men on top.
  • Birth of Capstone

    Scrushy and two others from HealthSouth create Capstone, a company that buys buildings from others, including HealthSouth, then sells them leases. HealthSouth funded the company when it was created.
  • HealthSouth in the Lead

    HealthSouth now rules the rehabilitation industry within the United States, with 250 buildings across the country.
  • Company Investments

  • Birth of 21st Century Health Ventures

  • Expansions and Falling

  • HealthSouth On Top

    HealthSouth has funded several halls, stadiums, etc., including the Olympic Committee's Medecine and Sports Science Centre. Scrushy is appearing more and more as if he will get into politics for his next career move.
  • New Medicare Policies

    HealthSouth's business not doing well at all due to new regulations from new Medicare insurance policy leading to share prices dropping by 93%. Scrushy does not appear worried though he later must admit to shareholders that they are not doing well. The shareholders are not pleased and accuse the company of insider trading. Patient treatments are suffering.
  • Fraudulant Behaviour, Business Suffering

    HealthSouth accused of overcharging patients and charging for treatments that were not provided. Allegedly the company also did not provide treatments up to standard, and in addition, these treatments were performed by illegitamate physiotherapists. With the new policies, HealthSouth has removed their home care treatment option due to financial problems.
  • Downfall of All

  • Shares Increasing

  • HealthSouth Looking Up

    As HealthSouth starts paying down its debts, Scrushy leaves his position at Caremark.
  • HealthSouth plummets

  • Scrushy Fired

    SEC against HealthSouth for fraud, Scrushy was dismissed from the HealthSouth corporation.
  • Scrushy Guilty

    Scrushy accused in court of 85 criminal charges, though he still pleads innocent to all of them. Charges include money -laundering, fraud and conspiracy.
  • Case Begins

    Scrushy's court case begins, Scrushy denies involvement in fraud, though all other CFO's and executives plead guilty. It is evident of fraud having occured since at least 1997. Scrushy claims he was framed.
    - Scrushy sold shares from HealthSouth for $170 million since 1991
    - courts find out that Scrushy was an extremely harsh employer and that the company threatened employees jobs if patient numbers were not kept high enough (even if they should have received more intense treatment elsewhere)
  • New but Fewer Charges

    Scrushy's number of charges has dropped from 85 to 58, though added were charges for perjury and obstruction of justice.
  • All Charges Dropped

    Scrushy is a free man, with having all charges been dropped.
  • HealthSouth Flourishing

    After the fraud scandal was dealt with, HealthSouth underwent a changeover of executives. Employees were better treated and paid their due salaries and patients were treated by legitamate therapists. Today, HealthSouth is a flourishing company.