Healthsouth: the Scrushy Way

HealthSouth: The Scrushy Way

Woodrow L. Calhoun

Northcentral University

Table of Contents

Introduction3

Impact on Stakeholders6

Outcome and Fairness of Punishment9

Conclusion11

References13

Introduction

When Richard Scrushy and his co-founders founded HealthSouth in 1984, business ethics and social responsibility may not have been a topic of discussion at any time during the early stages of the company. One might ask if Scrushy was at all familiar with Peter Drucker, Milton Friedman, or Patrick E. Murphy. One could assume that Scrushy and his co-founders certainly did not anticipate nor could they have predicated the crisis to follow some years later. HealthSouth’s fall from grace in 2003 did not happen overnight.

In Patrick E Murphy’s article The Relevance of Responsibility to Ethical Business Decisions he states that Responsibility in business implies a moral obligation to act saying “the ethical concept of responsibility is relatively new in the history of ethics and was developed in the twentieth century by several scholars. He states Weber introduced the ethics of responsibility where one is answerable for foreseeable consequences of one’s action (Murphy, 2009). With that being said, a timeline of HealthSouth’s scandal is briefly presented. The timeline is introduced to give an overview of the events leading up to the discovery of the scandal.

In an article printed in the Washington Post (September 30, 2004) staff members give this timeline of events in the HealthSouth scandal:

Sept. 29, 2004: Federal prosecutors announce new perjury and obstruction-of-justice charges against HealthSouth Corp. founder Richard M. Scrushy, accusing him of lying to regulators and urging a subordinate to lie to support his story.

Sept. 28, 2004: A prosecutor says the government won’t seek more prison time for former HealthSouth Corp. assistant controller Emery W. Harris, who is to be resentenced after serving five months for fraud.

July 1, 2004: A...