Corporate Culture Of Healthsouth Corporation

The Enron and WorldCom scandals were arguably the incidents that permanently changed the procedures for accounting controls. In response to these incidents, the Sarbanes-Oxley Act (SOX) of 2002 was passed. Once the knowledge of these scandals was made public, a number of subsequent accounting scandals were discovered in public companies such as Tyco International, HealthSouth, and American Insurance Group. In addition, a then-employee-owned company, Post, Buckley, Schuh & Jernigan, Inc. (dba PBS&J, now known as “Atkins North America, Inc.”), was also hit by a similar accounting scandal. Henceforth, a case study of PBS&J is presented where we will examine the fraudulent transactions that

This now bankrupt company, misappropriated investments, pension funds, stock options and saving plans after deregulation and little oversight by the federal government. However, with deregulation an increasing competitive culture emerged as the CEO Jeffry Skilling motto to his organization was to “do it right, do it now, and do it better” this was the rally cried that pushed ambitious employees to engage in unethical behavior as Enron use deceptive “accounting methods to maintain its investment grade status” (Sims, & Brinkmann, 2003, pp.244-245). As Enron continued to flourish and received accolades from the business community this recognition drove executives to continue the façade of bending ethical guidelines before their public fall from

The word “fraud” was magnified in the business world around the end of 2001 and the beginning of 2002. No one had seen anything like it. Enron, one of the country’s largest energy companies, went bankrupt and took down with it Arthur Andersen, one of the five largest audit and accounting firms in the world. Enron was followed by other accounting scandals such as WorldCom, Tyco, Freddie Mac, and HealthSouth, yet Enron will always be remembered as one of the worst corporate accounting scandals of all time. Enron’s collapse was brought upon by the greed of its corporate hierarchy and how it preyed upon its faithful stockholders and employees who invested so much of their time and money into the company. Enron seemed to portray that the goal of corporate America was to drive up stock prices and get to the peak of the financial mountain by any means necessary. The “Conspiracy of Fools” is a tale of power, crony capitalism, and company greed that lead Enron down the dark road of corporate America.

As aforementioned, the Sarbanes Oxley Act’s requirements reduced fraud and increased corporate governance across both for-profit and not-for-profit organizations. That said, the SOX act has, in my opinion, been absolutely effective in regulating ethical behavior among for-profit as well as not-for-profit health organizations. The establishment of this law has contributed greatly to the investigations of fraud among health care organizations. According to attorneys at Post and Schell, several federal, criminal investigations have been started after the law’s enactment, making it clear that healthcare organizations were within the same scope of corporate governance and would not be immune from the same criminal prosecution. In 2003, United Memorial Hospital in Michigan—a not-for-profit healthcare organization—signed a guilty plea in federal court admitting to fraud for over use of pain management surgical procedures after the death of a patient. Even though sentencing has been deferred, this admittance of and plea agreement contained many of the corporate “not-tos” from the board down. The system of reporting for the hospital, its internal audit investigation, conflict of interest disclosures and response to complaints were all held as objects of interrogation (Levine & Short, 2004).

Most word references characterize fraud as a bogus representation of true data. Whether that false data is given by expressing false words, deluding claims, or by concealing or disguising uncovered data, it is viewed as fraudulent because of the beguiling nature. In spite of the fact that it is deceptive to give false data, people even in real companies will attempt to cover their misfortunes by reporting false data. Taking after many years of monetary frauds and outrages including executives and officers at a portion of the biggest organizations in the United States, Congress established the Sarbanes-Oxley Act of 2002 (Cheeseman, 2013). Congress ordered the Sarbanes-Oxley Act of 2002 (SOX Act) to shield customers from the fraudulent exercises of significant partnerships. This paper will give a brief history of the SOX Act, portray how it will shield general society from fraud inside of partnerships, and give a presumption to the viability of the capacity of the demonstration to shield purchasers from future frauds.

One example of many health insurance fraud cases involves a $115 million whistleblower settlement involving Park Ridge Hospital and Adventist Health System. The lawsuit arose when three longtime employees of Park Ridge hospital had creditable insider knowledge about the hospital paying kickbacks to physicians’ who were intentionally referring their patients to the hospital for illegal monetary incentives. The civil suit also alleged that the health system was overbilling patients for medical services. One example of the overbilling is when Park Ridge Hospital devised a scheme with partnering physicians to perform outpatient procedures inside the hospital for higher reimbursement when in fact the procedure could have be done in an office setting at a lower cost. The act of health care fraud not only financially hurts the victims but it also compromises the quality of the patients care and puts patients’ health at risk. Adventist Health System agreed to settle the lawsuit with the United States government for $115 million dollars which includes the whistleblower’s reward, which will roughly amount to a little over $118 million after legal fees are calculated (Moss,

Organizational culture is a system of symbols and interactions unique to each organization. It is the ways of thinking, behaving, and believing that members of a unit have in common” (marquis, 2011). The conveyance of the system culture requires an active, constructive role of management and leadership. The leaders will need to assess the subcultures, perceptions, attitude and beliefs and influence, in their unit to intervene and meet their responsibility (Marquis, 2011). In this paper, the organizational culture and leadership assessment thru observation and data collection of a teaching hospital that is not-for-profit healthcare full service medical center with 851 beds, and it is the fifth largest hospital in Florida. The hospital’s mission core is on the Quality- caring Model and the value it places on human relationship. Additionally, the hospital’s promise of integrity with the professional standards as a commitment to deliver excellence to the community (intranet citing). The hospital leadership outcome approach is through encouragement, relationship, goal orientation, engagement, patients and staff satisfaction, and adaptation to changes. The organization takes pride in receiving the Gallup Great Workplace Award in 2014, which proves the direct relationship of how employee engagement drives high quality outcomes. Incorporating commitment of leadership, accountability and performance, development of quality and patient safety and ongoing learning, and effective

Prior to 2002, financial statement reporting for publically traded companies within the United States was overseen with far less oversight in comparison to current reporting standards and procedures. Appropriate financial reporting is merely one element that was not occurring prior to 2002. An element of corporate dishonesty and deception existed within some the largest publically traded companies and this idea of deceitfulness was perpetuated by the executive staff of the businesses. Enron’s financial disintegration became the facilitator for the need of more rigid financial oversight, but they were not the only company that added to the idea of corporate fraud.

HealthSouth Corporation (HRC) is a publically traded healthcare company on the NASDAQ. In 2001 HealthSouth stocks were valued at $15.12 per share and net income was reported to be $393,600,000. For all intents and purposes the company was sound. Until, whistle blower and CFO, Winston Smith, shared with authorities the unethical accounting practices allegedly forced upon him by the company’s CEO, Richard Scrushy. According to the Security and Exchange Commission’s complaint, “since 1999, at the insistence of Scrushy, the HealthSouth Corporation systematically over stated its earnings by at least $1.4 billion in order to meet or exceed Wall Street earnings expectations” ("SEC vs. HealthSouth," 2003). It should be stated that healthcare

The HealthSouth Fraud ACCT 480: Forensic Accounting Emily Bauer 2/7/2016   At the time when the HealthSouth fraud was discovered in 2003, HealthSouth was the largest owner and operator of inpatient rehabilitative hospitals as well as a provider of surgical and diagnostic services. Employing more than 60,000 people at their 2,000 locations, this billion dollar company had locations in all 50 states as well as operations in the U.K., Canada, Australia, Puerto Rico and Saudi Arabia. In 2003, they were the third largest healthcare company based on revenue.

Everyday individuals who are lucky enough can go to a hospital and receive help. However in some places help is limited if finances are. Money is power and without money individuals are left to face health care with what they have in their pocket. Insurance companies may help customers with financial coverage for things such as health care. However this is only to a certain degree. Once individuals come to realization that their insurance companies cannot help them come up with sufficient funding for their treatments or procedures the hospital will only obligately stabilize the individual until money is included in the process. Hospitals are frequent offenders for fraud. Hospital professionals may choose to work together with insurance companies or they may commit fraud by upscaling coding costs. In John Q (2002). the truth is revealed to John. By the doctors purposely neglecting to disclose or propose information about extra testing to along side HMO. The hospital also gains a surplus of revenue by failing to mention low cost preventable procedures in exchange for a annual bonus and later more profitable surgeries that insurance companies will not cover. In conclusion hospitals are frequently perceived as a helping hand in society but are truly driven by power and money and are committing white collar crimes

Recognition is growing among healthcare leaders of the need for a culture change within their organizations. Moving from recognition to reality, however, is more difficult. The problem lies in the perception – or misperception – of what a culture change actually entails.

On March 19 of the year 2003, Securities and Exchange Commission brought the trading of HealthSouth to an end on the New York stock exchange, charging the company for inflating its earnings by more than 10 percent and overstated its profits by more than $2.5 billion between 1999 and 2002. HealthSouth’s trading reached to $30.81 in the year 1998, but ever since the trading of the company has been put to an end it reached to $3.91 per share. One week later, Owens pleaded guilty to changing and editing the company’s financial statements.

The perfect fraud storm occurred between the years 2000 and 2002 involving two of the largest energy and telecom corporations in the United States: Enron and WorldCom. It was determined that both organizations fraudulently overstated assets, created assets from expenses or overstated revenues, costing investors billions of dollars and resulting in both organizations declaring bankruptcy (Albrecht, Albrecht, Albrecht & Zimbelman, 2012). Nine factors contributed to fraud triangle creating this perfect fraud storm, and assisting management in concealing the fraud until exposed and rectified.

This paper will discuss the corporation WorldCom, a telecommunications company that was based in Mississippi. In 2002 WorldCom was involved in one of the largest accounting scandals in the United States. WorldCom inflated its assets by nearly $11 billion dollars, which eventually lead to about 30,000 employees losing their jobs, as well as, 180-billion dollars in losses for its investors. The CEO at the time of this accounting fraud was Bernard Ebbers and led to him receiving a 25-year prison sentence. This paper will go into the details of how WorldCom was able to manipulate its accounting records to deceive its internal auditors, as well as, investors.