Richard Scrushy – HealthSouth
He built a rehabilitation empire on alleged fraud. He's still trying to rehabilitate his reputation.
Richard Scrushy beat the rap that the FBI laid on him in 2004 for accounting and securities irregularities at HealthSouth. But after his acquittal, he was convicted in a corruption and bribery scandal involving former Alabama Gov. Don Siegelman.
Prosecutors alleged that Scrushy agreed to pay more than $500,000 of Siegelman’s debt in exchange for a seat on the Certificates of Need Review Board – which reviews hospitals and approves their construction. Scrushy was sentenced to six years in prison in 2007 and was released in 2012.
At HealthSouth, Scrushy built one of the nation’s largest providers of outpatient surgery, diagnostic imaging and rehabilitative services, employing more than 50,000 physicians at its pinnacle. He did it with a $6.5 billion acquisition spree, possibly aided by phony accounting, prosecutors alleged.
He took over rehabilitation, surgery and diagnostic clinics nationwide, and in serving the sick and dying, he paid himself a fortune.
He was accused of using intimidation, threats, and cash payments to coerce top HealthSouth executives into committing fraud. And in the end he blamed his underlings.
Prosecutors failed to prove their criminal case against Scrushy, even after 15 top executives, including five former chief financial officers, pleaded guilty. Scrushy’s successful defense: He didn’t know those guys were cheating.
Though he beat the criminal charges, he consented to a civil enforcement action requiring him to pay $81 million in penalties and disgorgement, and permanently barring him from serving as an officer or director of any public company. He was also besieged with class-action shareholder lawsuits.
The company he ran agreed to pay $100 million in 2005 to settle civil fraud charges from the Securities and Exchange Commission. It also reached a $325 million settlement with the Justice Department for Medicare billings.
CEOs like Scrushy contribute mightily to the runaway health care costs that keep bankrupting Americans to this day.
The CEO who replaced Scrushy, Jay Grinney, was quick to put Scrushy in the rear-view mirror.
“It is very important to me that you understand this: Under no circumstance will Richard Scrushy be returning to this company,” he said in a 2005 letter to employees. “The current board and management team is appalled by the multibillion-dollar fraud that took place.”
Since serving his time, Scrushy has worked hard to rewrite this history.
He defends himself vigorously, wrapping himself in religion, patriotism and victimhood to this day. He bills himself as a “business visionary” and “inspirational speaker” on his website richardscrushy.com.
“Richard Scrushy was born in 1952 in Selma, Alabama, a town known as the birthplace of the civil-rights movement. He grew up modestly in a home with working parents and he has an older sister and a younger brother. The Scrushy’s attended the Methodist church, where Mr. Scrushy sang in the youth choir and participated in the Methodist Youth Fellowship. He was active in Boy Scouts and little-league baseball, and at the age of eight, Richard taught himself to play piano and guitar. Throughout school, he played piano and organ at dances and parties.”
So there you have it: Civil rights activist … choir boy .. Boy Scout .. athlete .. musician … convicted felon … and now an inspiration to us all.