Healthsouth Fraud Case

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During the 90’s, investors and lenders shifted their interest from the bottom-line to revenue growth. Therefore, companies with growing revenues were worthy of receiving their investments. This motivated companies like HealthSouth to transition into more aggressive revenue recognition policies, which eventually turned illegal when they began overstating revenues. From the 2-million journal entries under $5,000 to fabricated source documents, HealthSouth went to great lengths to commit and conceal its fraud. In addition, employees were closely monitored to ensure that they were not arousing suspicion to HealthSouth’s fraud. The leading force of HealthSouth’s culture was the company’s Chief Executive Officer (CEO), Richard Scrushy, who molded inexperienced newcomers and utilized intimidation on current employees to participate in the fraud. Employee loyalty was …show more content…
Merrell Dow Pharmaceuticals, Inc. was inadmissible because the testimony was not reviewed by the judge. Therefore, HealthSouth interviews must be in compliance with Rule #702. Rule #702 would increase the evidence’s relevance and weight for an expert witness. The interview must result from usage of practical methods and principles that were later reliably applied by the fraud investigator to the facts of the HealthSouth fraud case. Before presenting the evidence, the judge would review the materials to better understand the evidence. One method for interviewing would be reciting the Miranda Rights. The Miranda Rights allowed HealthSouth employees to invoke their rights to remain silent or wait until their attorneys were present. Failure to administer the Miranda Rights would make the interviews inadmissible in court. Waiving the Miranda Rights would be an irrevocable action overturned only under intoxication, duress, or handicap (DAUBERT v. MERRELL DOW PHARMACEUTICALS, INC. 1993) (Just Whose Employee is it? 2014) (Rule 702 2017) (Steinberg
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