1. Is it fair to hold a CEO responsible for any and all actions of a company? Consider that Scrushy was not an accountant and that the outside auditors, Ernst & Young, did not detect the fraud. If he were not involved, should he still be held accountable?
2. Would it have been appropriate for employees to blow the whistle in this case? Was there imminent harm to people? What would be an appropriate motive for whistle-blowing, and how much proof do you believe the employee would have needed to be credible?
3. From your research and reading, what dynamics set the moral tone at HealthSouth? Do you feel that employees were influenced by the corporate culture?
4. There seems to have been a significant amount of wrongdoing at HealthSouth. A number of executives were involved in fraud, but there also appears to have been a great deal of complicity on the part of more rank-and-file workers. How would you assign moral culpability in a case like this?
5. Derek Parfit describes a case called the “Harmless Torturers.” He says that in the bad old days, one torturer gave a jolt of 1,000 volts to a victim, but nowadays 1,000 operators each fl ip a switch carrying 1 volt. Any individual contribution to the overall effect is negligible, and therefore each one believes he or she has not personally done any significant harm. Would the same logic apply in the HealthSouth case? What, if anything, is wrong with the reasoning involved?
6. For a long time, HealthSouth posted profits, and Scrushy was a darling of Wall Street analysts. At what point, if any, should there have been greater regulatory oversight? Do you believe the outside auditors or the board should have acted more like bloodhounds than watchdogs?

HealthSouth is America’s largest provider of outpatient surgery and rehabilitation services. It owns or operates over 1,800 facilities across the country and serves 70 percent of the rehabilitation market. It was founded in 1984 by Richard Scrushy, a former respiratory therapist who believed that efficient one-stop shopping could be applied to the health care industry. From the time it went public in 1986, the Birmingham, Alabama, firm exceeded Wall Street expectations, a pattern that would continue for the next 15 years. In 1992 Scrushy aggressively began to acquire other clinics, and HealthSouth stock soared 31 percent annually between 1987 and 1997.

  • CreatedDecember 13, 2013
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